equity release

geoffken

I have a house valued at £300.000 and I want to release approx £10,000 per year for living expenses etc.
Can somebody look at this scheme and work out the length of time before no equity.
Some assumptions initially
1: Interest 5% (for simplicity)

2: House inflation 5% again for simplicity

Year 1 Borrow £ 10500 500 for interest payment

Year 2 Borrow another £11,000 1000 for interest on £20,000


Am not able to construct formula.


In theory it might last forever but I doubt if a building society would buy it but it would beat Gordon out of his money

PS in 2 years house will have risen in value 2*5% i.e. to £330,000



THANKS

JoeK_3

This is rather a complicated request.

Contact Just Retirement and ask them for an illustration, based on your needs at https://www.justretirement.com

I have a feelig that the minimum loan is higher than £10,000 though.

JoeK

geoffken

Thanks for this.
I am cautious re "commercial equity release" because of horror stories and was wondering if a main stream mortgage lender would be interested in releasing small tranches of money each year rather than borrowing say £50,000

Lipstick_2

Hello. You could have a look at Northern Rock but they all seem to have a minimum that is more than your requirement of £10,000.

Luv

Lipstick

EdInvestor

What you need is an equity release drawdown plan. At the beginning you determine the total amount you intend to borrow, but then you draw it down in tranches, as and when you need it. You don't normally pay interest on equity release plans - the interest rolls up and is repaid when you die from the sale proceeds of the property.The drawdown arrangments keeps the interest rollup as low as possible.

However you can redeem equity release mortgages, and indeed renegotiate them if better terms are available.

Try this website for more info: https://www.ship-ltd.org