Mortgage for 80 yr old?

EdInvestor

Mr_helpful wrote: »

Equity release is really I think for large homes otherwise tha amount released is too small to do much with.

On the contrary, people who have large homes can usually trade down to release the equity, which is a much cheaper option.

Equity release is most useful in fact for people just like the OPs father, who can't trade down, have no extra resources ( so a little money released can help a lot), and will probably need to sell the home to pay for care in the end anyway (so an inheritance is unlikely).

I suggest the OP investigates the equity release "drawdown" option.Say they will lend him 50k.With the drawdown option you would only take out say 5k of the total to pay for the care, and you would only pay interest on the 5k.But the other 45k remains available to be withdrawn later as he needs it ( no more negotiation is required).

Aim to get the lowest interest rate you can.Try also to keep redemption penalties as low as possible - you may want to remortgage to a new ER plan later if interest rates come down further and the value of Dad's house goes up.

Mr_helpful

Now I dont know Edinvestors knowledge or capability to advise on Equity release but as a warning to the OP I will copy this from an equity release site

"There's no doubt about it that Equity Release is a complex financial product for many would be customers. And not only that, they deal with the single most dominant and important asset that most of us own, property. The crux is that yes, Equity Release or lifestyle mortgages 'release' cash but at the risk that the property may fall into the hands of the insurance company when you pass away*, this is turn will leave no money from a property sale to pass on to your heirs.

On the face of it, the deal is a straightforward one but IFAs are petrified by claims of 'miss-selling', not just today but many years in the future. It is interesting to therefore note that the well known and respected website IFA Online is reporting that 55% of IFAs refuse to advise on Equity Release products for fear of potential legal action in the future.
So what does this all mean? Basically if you're thinking about taking an Equity Release scheme out, make sure you do as much research as possible and be aware that you might struggle to find a good financial advisor who will take your business. That fact right there should make you slightly wary"



Equity release is a good way of guaranteeing the home ends up with the lender. It might be good advice to consider equity release but it also could be very dangerous. I think I would look at ways of learning about asset protection. Books by Adam Starchild might help as much of the time there is no need to lose ones home. The fathers problem is the fact that he has worked and gained some assets so the state is not too helpful. If he had no house we probably wouldnt be having much of a discussion.

EdInvestor

I would suggest that for both the owner and any heirs, it is better that some of the money is extracted from the value of the house and spent by the owner as he pleases, rather than all of it going to the council to pay for long-term care.

But of course I could be wrong.

Ian_W

Mr_helpful wrote: »

Equity release is a good way of guaranteeing the home ends up with the lender. It might be good advice to consider equity release but it also could be very dangerous. I think I would look at ways of learning about asset protection.

Cobblers - this isn't about "asset protection" as if the OP's dad was minted and trying to find ways to protect multiple assets from IHT or whatever, in fact on the face of it he has very few options left and that's why the OP was enquiring about a mortgage. Do you really think its a good idea to borrow on a normal mortgage when most or all of the repayments will seemingly have to come from the money borrowed?

Lets see if I understand it. Dad is 80 and has mixed health, when he's ill he needs money for carers which is increasingly difficult to find from his cash assets - but he does own outright his own house, his only other asset.

The OP is his only heir but doesn't have the resources themselves to fund the care but has taken steps to ensure all state benefits that can be claimed are being - but that is still not enough without raising money and the only place now appears to be the house. And let's face it if in the future, as sounds quite possible, dad has to go into full time residential care the council will be after the house to provide funding anyway.

My view is that equity release is probably a viable option - it may be the only one other than the obvious which is dad not getting the carers he needs when ill. Are you suggesting that "protecting assets" is more important than him getting proper care?

Sure it needs research, which is why I posted the link to Age Concern's help sheet - but it isn't some "dark art" as you seem to be suggesting. Brokers on here continually tell us how onerous regulation is so as to ensure us consumers are protected so if those who sell equity release products have to be specially authorised by the FSA doesn't that suggest greater protection rather than less?

My mother is 80 later this year. I'd much, much rather she departs this earth without a bean to leave me and has all she needs in the later years of her life than she wants for things like care when she's ill - just to leave me better off by her passing.

Mr_helpful

I dont see how what I posted is cobblersI have said equity release is a subject that needs careful consideration Is that cobblers to say that?
I have said that the OP needs to consider asset protection. What is cobblers about that? You may have loads of money and dont mind if your mothers house goes to the state but I think the OP's dad had workedhard for what he had and most people would rather their asets passed on to their offspring rather than a lender or the state. It would be rather stupid if you could provide the care needed without losing assetts dont you think. The state benefit system is riddled with loopholes, what is wrong with seeing if you can exploit them.
So how much do you really know about equity release as you seem intent on advising the OP on it

EdInvestor

Mr_helpful wrote: »

The state benefit system is riddled with loopholes, what is wrong with seeing if you can exploit them.

The OP's father has an income of 12k a year and the OP has already said he is claiming all (non means-tested) benefits possible.I suppose you think he should sell his house, put the money in an investment bond (ripoff of the century) and then rent, do you?

Perhaps that's why advisors don't want to do equity release:the regulator has already banned them from telling people to put equity release money in an investment bond.As a result they don't make much money from the equity release, certainly nothing like as much as the upfront 7% commission they make from the bonds, the highest in the business....

toonfish

this is a classic case for equity release consideration - would probably achieve everything the client needs. It is a good product when used appropriately, and not as detailed by Ed above to fund another investment.

He coul ddraw the release as an income rather than lump sum as well, or a combination of both which is much more difficult than a conventional mortgage and if interest payments are required to be made I can't see that his standard of living will improve much.

Mr_helpful

Is there something up with my computer. Is it printing things behind my back. Where on earth did I mention bonds? Have I advised Equity release?
Mind you sell the house buy a joint life bond with daughter hide offshore like in luxembourg, no visible assets for state to see, has to fund care 100%. Father pegs it bond transfers to daughter, quick eurostar trip to pick up money from lux in bearer bonds and cash in at barclays or wherever.
Good on yer Edinvestor you could have just cracked the problem but may be a lengthy reason why letter.

Ian_W

Mr_helpful wrote: »

I dont see how what I posted is cobblersI have said equity release is a subject that needs careful consideration Is that cobblers to say that?
I have said that the OP needs to consider asset protection. What is cobblers about that?

You don't even damn it with faint praise - make it sound more like the plague! But perhaps the OP could confirm if the concern to preserve the house for them - or ensure dad gets the carers he needs when ill?

Mr_helpful wrote: »

You may have loads of money and dont mind if your mothers house goes to the state but I think the OP's dad had workedhard for what he had and most people would rather their asets passed on to their offspring rather than a lender or the state.

I may have loads of money or I may not, but my experience of life is it is often the better off who obsess more about their inheritance above the welfare and well being of their elderly [STRIKE]nestegg[/STRIKE], whoops, relative.

Mr_helpful wrote: »

It would be rather stupid if you could provide the care needed without losing assetts dont you think. The state benefit system is riddled with loopholes, what is wrong with seeing if you can exploit them.

OP appeared to have the benefits covered but advice from the CAB would have been a good suggestion - which I must have missed.

Mr_helpful wrote: »

So how much do you really know about equity release as you seem intent on advising the OP on it

Where did I say I had specialist knowledge, posted a link to Age Concern and I'll post another to Help the Aged's guide
https://www.helptheaged.org.uk/NR/rdonlyres/84198B3B-A3D7-4FA7-85DD-69DA36696F8D/0/equity_release_advice_guide.pdf
You suggesting they don't have specialist knowledge or the interests of older people at heart?

But you didn't answer my one question Mr Helpful:

Do you really think its a good idea to borrow on a normal mortgage when most or all of the repayments will seemingly have to come from the money borrowed?

Mr_helpful

Well on your age concern leaflet they say they cannot give any financial advice on the first page so whether they have specialist knowledge is debatable.

Why do you think that the FSA made Equity release a special case? You say yourself that its had a bad rap but its better now because the FSA regulates it heavily. Now that really is cobblers. The FSA regulated personal Pensions from the word go and look how good they turned out to be. The reason that these schemes are regulated is because like the good old shared appreciation mortgage they have in many cases turned out to be financially very bad. Yes they will fit a few people and that is why I have said that the OP should consult an expert.
Most old people do not like the house they have worked hard for to end up with the state or some greedy lender so the fathers wishes would need to be taken into account. The rich dont worry so much because they have advisers who can find legal loopholes in the system
As for your last question the answer is no I dont think its a perfect solution but then apart from my tongue in cheek reply to Edinvestor I dont think there is a perfect solution but the answer I gave was for the OP and not other non qualified meddling dogooders.
Fact over 600 million state benefits go unclaimed the OP may look like the benefits question has been looked at but there is no harm in taking a trip to the local DSS now and again to see if further help is available.