equity release hard to decide

holly_hobby

Right there would be some saving on interest, IF you select either a residential mge OR a lifetime arrangement where you can pay the accrued interest each month - but you need to consider this against any mge application/conveyencing fees, which may wipe out the saving altogether.

You know you want to move in 5 yrs, so on a residential mge (if affordable and available on your status) you simply select a product that has no ERCs (bar exit admin fee) or ones that expire within the reqd timeframe. You also have an idea of the ERC for the lifetime arrangement you have considered, plus associated application and exit fees.

If a resi mge isn't available, and the bank loan is unsecured (which at 9% I would guess it is), you may as I say wish to apply for a reduced repayment plan before going down the equity release route - which will be on an affordable sum based on the details of your budget planner and current financial circs - as I say CAB will assist, but there are also lots of debt helpsites and forums, including here of course.

I must stress though that this will typically result in the registration of a default by the creditor (expires after 6 yrs) - as technically you would be deviating from (breaching) the terms of your original agreement - so that does need to be bourne in mind if you anticipate you will require any kind of future finance in the medium term - if of course this is unlikely, then this may be a solution to the issue wout having to go down the lifetime mge route.

The bank may wish to try and secure their interest via a charging order (which is NOT the same as an order to sell), but a registration of interest, which means that upon sale the conveyencer, after redeeming your outstanding mge, will then settle any other charges (ie bank loan, etc) in order - with the residual equity then forwarded to you. This would essentially become a secured loan, but having typically lower costs (than remortgaging fees) with the benefit of monthly payments being as per your agreed affordable amount until a change in financial circs/sale - your debt adviser at CAB would walk you through this.


Hope this helps

Holly