Equity Release Schemes - Good, bad or ugly?

chops05

My mum is thinking about doing an equity release scheme and I wondered if it is a good idea or not?

She is in a bit of a difficult situation and basically wants to retire and get her small morgage plus a loan that is secured on her property paid off. Her ex left her with a lot of debt and what with the mortgage rates going up she is finding things a bit difficult and rather than move (she has been living there for over 30 years!) she wondered if equity release is a better option for her.

Any ideas?

I've got my reservations about it but if it is going to mean my mum can live without worrying about money then it will be all worthwhile.

Alan_M_2

I looked into this for my parents and I consider it the absolutely last chance saloon when no other options are left.

What is her house worth?
What debts does she have?

Does she have an income?
How old is she?
Is She in good health?
Are you in a position to help or guarantee any loans for her?

Lets see if we can find an option.

chops05

Here goes!

What is her house worth? about 200k
What debts does she have? mortgage of £48k and loan of £30k, maybe a credit card of £2k

Does she have an income? She is working full time at the moment but she wants to retire - her wages are not great anyway. She is claiming her state pension.
How old is she? 62
Is She in good health? she had breast cancer 18 months ago and has got high blood pressure - think its stress related but its being checked out by GP
Are you in a position to help or guarantee any loans for her? I wish I could help but I'm stuggling with my debt too right now.

I have suggested that she moves and buys a one bedroom flat - they go for about £120k plus the monthly bills will be cheaper but she is against the idea. I think it is because the house holds many memories for her as she has lived there for 30 years and my sister and I were born there!

Alan_M_2

Moving is by far the most sensible option, downsizing, clearing all the debt, living a home that's paid for and having an easy life.......

To be honest I think she'd struggle to raise enough on equity release because of Her age.

chops05

My sister and I are arranging for a mortage advisor to come round and have a chat with my mum so that she can see all the options open to her.

I have tried to tell her that selling is her best option and I think if she hears it from someone else she may actually take notice!

Thanks for your help Alan, much appreciated. :beer:

Sarah

Me_Myself_2

My mum is in exactly the same position, but refuses to sell. Her situation is getting worse and worse and she has sleepless nights worrying about money, but she's 70 and won't move.

Good luck.

Alan_M_2

Personally I don't understand this, but then, I just don't get attached to property, it's just somewhere to live as far as I'm concerned. I'm more interested in the area in which I live than the specific property.

However I realise many people have sentimental attachments to houses, the thing is, when it's making you ill with worry on how to keep it, when downsizing will make life more comfortable, the sentiment is becoming a problem.

My folks are the same age (early 70's), My father gave up his car yesterday because of a medical condition and He's thoroughly depressed that He can longer drive, however, He still works albeit part time and now can't do the commute from Norfolk to London that He needs to.

This is about to get messy for me, and it doesn't help that I live 140 miles away.

Me_Myself_2

One option we're considering is for us to buy mum's property. Or a percentage of it. We would then have that percentage on her death and the rest would be divided as normal.

Alan_M_2

We're going through the same process it certainly beats equity release, which in my view is giving away at least 50% of the property.

chops05

My mum has come to a decision and I'm quite pleased with the outcome. :j

My Grandad wants to move. He has a bungalow which is too big for him and he lives 30 miles from us. He is in his 80's and he is slowly becoming less mobile. He wanted to get a warden controlled flat and move down near me, my mum and my sister.

We all had a family discussion today and my Grandad is going to put his place on the market next week and buy a bunglow down here and my mum is going to move in with him once she has sold her house later in the year.

I think selling both properties at the same time will be too complicated. My sister and her husband are living with my mum at the moment and she doesn't want them "out on the street" but they were looking to buy a house this year anyway.

This way my mum can sell the house in her own time, pay off the mortgage and the secured loan, give my Grandad a percentage of the sale and then maybe retire. :beer:

I'm really glad that she hasn't gone down the equity release route but then if it was the totally last resort then we would have had to go along with it.

Good luck with your parents

Alan_M_2

Sounds like a sensible outcome, I hope it all goes well for them.

My mother may prove to be a little more stubborn though...We'll see what we can do...