Equity Release

margaretclare

they will almost certainly use a very low house valuation to calculate the max loan value.

Yes, that's true. They did. The guy who did the valuation walked up the road, looked at the roof, walked round the back, through to the front and was gone. 5 minutes to do a valuation which was lower than other properties being sold at the time.

From our point of view, however, it has worked out well.

ZacSpeed

pieropan wrote: »

I wonder how others, particularly those who have already gone down this route in similar circs, feel about it?

Might be worth posting the question on "sagazone". There are a couple of threads already but I can't post links as a newbie :-( but you can google search for "sagazone 64228" and "sagazone 84236"

Cheers, Zac.

pieropan

Appreciate the advice Zac-you have been very helpful !

pieropan

Just in case anybody is interested this is some general info on ER

· The minimum age to qualify is 55yrs of age and the younger you are the less you would get from the property.
· At 60yrs of age, you can currently release 20-24.5% of the property value. (80-100k circa on 400k)
· The drawdown option is available
· Rates are fixed for life and average 6.15-7.5%

imported_jac

Hi

Can anyone offer any advice for my sister? She is 76 years old and owns her own house. She also owns a house that was left to her by her aunt but she can't sell it because her aunt's lodger is allowed to live there until he dies. He doesn't have to pay rent but does pay the utility bills. He is about 78 years old. She is not very well off as far as liquid assets go and wants to move nearer to her children. We wondered if equity release would work for her on the house that her aunt left her, she could then put this with the proceeds of her main residence, which would enable her to get a bungalow nearer her children, as she now has difficulties with stairs. Her main residence and her second home are both worth about £90,000 each. Would equity release be feasible for her or is there another way she could get some extra money out of the second home? Thanks. Jackie

holly_hobby

Unfortunately, she won't be able to utilise a lifetime equity release product on the "let" property.

Furthermore, although ordinarilly, she would be able to release equity via Buy To Let remortgage (with a max term till circa her 90th birthday) - we have the complication of a current lifetime & rent free tenancy of the chap, which will rule out all BTL lenders (talk about Aunt taking a belt and braces approach !). This is because there is no rental income to support the mge, and the max BTL tenancy term is on a 6 mth renewable AST.

The problem with the current arrangement is that it raises issues re the lenders requirement of vacant possession and future possessionary rights, which will effectively be prevented under the current tenants lifetime tenancy rights.

Once the Aunt's lodger has vacated the property, it opens up the use of this inherited dwelling, but under its current residency arrangement, and for the reasons given, it is unfortunately unmortgageable and out of consideration I'm afraid.

Has the lady spoken to the chap (which I assume is the Aunts surviving partner), to see if he may be "persuaded" to move to alternative accomodation ... this may well involve a financial sweetner to assist his moving costs, but other than that (and assuming the liftetime tenancy has already been legally examined, to ensure its been correctly executed and is unbreakable .... I know pursuing that avenue would be cruel, but I'm advising from your Sisters point of view), she's a bit snookered I feel.

Hope this helps (sorry it wasn't brighter news !)

Holly x

xylophone

This is a very long shot but would the lodger consider becoming your sister's lodger in a bungalow in a location that suited them both? I assume that some legal agreement could be put in place to protect them both?

Other than that would the sale of your sister's house realise enough to enable her to purchase a one bedroom flat?

Or would there be any chance of sheltered housing through the local council near where her children live? The proceeds of the sale of her dwelling would enable her to pay the rent etc?

imported_jac

Hi

Thanks Holly Hobby and xylophone for your quick replies. It looks as though she is, indeed, snookered. The chap won't leave, we've tried that as he would be much better off in sheltered housing, but he is adamant. My sister will be moving away from the area and he wants to remain where he is and in that house. Would shared ownership work in her situation. I will suggest the sheltered housing option to her.
Thanks
Jackie

kidmugsy

pieropan wrote: »

... now want to enjoy early retirement after 35 years of working with some extra cash via Equity release.
... downsizing won't work for us ...

It's quite a common pattern on here for someone to ask for suggestions, having already ruled out the best (or only) option.