M'gage soon paid off. Equity release?

seven-day-weekend

I think what jellie meant was that they will have extra money because they won't have to pay the mortgage, but if they have been paying it for years, it's almost certainly not a lot.

However I too would think more than once about equity release. Are they eligible to claim Pension Credit? If they are they will also get their Council Tax paid. PC makes their minimum income up to £222 a week for couples if their income from all sources is less than that.

Use the calculator on the site below to find out.

https://www.gov.uk/pension-credit/overview

I will say that we paid our house off in our 50s and there is no way I would want it in hock again. The sense of freedom is worth more than that. We are now in our 60s and are house/pet-sitters, this earns an extra income (which we can spend on holidays/eating out/hobbies) and also saves on gas and electricity while we are living in someone else's house.

xylophone

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS65_Equity_release_fcs.pdf?dtrk=true

http://www.ageuk.org.uk/money-matters/income-and-tax/equity-release/
http://www.ageuk.org.uk/products/financial-products-and-services/equity-release/
may be of interest.
Are your parents entitled to pension credit? http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

HappyMJ

An equity release mortgage will cost much more in interest than any standard residential mortgage. They could borrow money on an unsecured loan from a certain large supermarket such as Sainburys for lower rates than any equity release mortgage rate. They only charge 5.1% a mortgage equity release product might charge about 7%. If I ws the beneficiary of the money...i.e if my mother was thinking about it I'd advise her not to do it. I'll be happy waiting until she actually dies before my sister and I get to take advantage of any remaining equity in her house....if any...although she is so healthy I'll probably be in my 70's or 80's when she's anywhere near that point.

ukcarper

Might be worth reading this

http://www.ageuk.org.uk/Documents/EN-GB/Information-guides/AgeUKIL6_Equity_release_inf.pdf?dtrk=true

buel

Thank you all, that is SO very interesting and helpful. Unfortunately I am currently on my phone so can't use the links but I will later.
I must admit that I was unaware that equity release places the home at risk. I just thought that the 'loan' increased over time and was paid off when either the owners died or the house was sold.

Regarding their pension, what they receive is far below the £222 per week I'm afraid. I believe this is due to them having low NI contributions due to my father's long term ill health.

seven-day-weekend

buel wrote: »

Thank you all, that is SO very interesting and helpful. Unfortunately I am currently on my phone so can't use the links but I will later.
I must admit that I was unaware that equity release places the home at risk. I just thought that the 'loan' increased over time and was paid off when either the owners died or the house was sold.

Regarding their pension, what they receive is far below the £222 per week I'm afraid. I believe this is due to them having low NI contributions due to my father's long term ill health.

If their income from all sources is less than that amount they should apply for Pension Credit:

https://www.gov.uk/pension-credit/overview.

If they are entitled to ANY amount of PC, then that will entitle them to free Council Tax.

Well worth exploring, imho.

buel

Thanks for that.
Please can I ask why would a house be 'under threat' with an equity release loan? I thought it was just a case of the equity release company waiting for the house to be sold?

wedgehog

I agree Buel and I too would like an answer to that as I had been considering doing an equity loan

seven-day-weekend

I think with some types of equity release, the interest can roll up until it is more than your home is worth.

http://www.theguardian.com/money/blog/2013/mar/16/equity-release-older-people-cash

wedgehog

If you go for the option where you sell them the house but you are allowed to live in it until you die or go into care, surely there is no interest building up ?