Government to offer Equity release

mystic_trev

Your Home could really be your Pension!

A report to be unveiled in the House of Lords on Thursday sets out a scheme aimed at delivering a simpler and cheaper alternative to equity release for homeowners aged 75-plus. On death the property would be sold, the debt to the state paid and the remainder passed to the person’s estate.

http://www.thesundaytimes.co.uk/sto/business/money/article1419690.ece

the_flying_pig

seems sensible enough, maybe.

Conrad

Op you imply surprise that people would use the equity granted by the market towards their pension. Why?


We like investing via our property, it's what we do. It partly explains the robust housing market as we are factoring into our notion of value not just the utility of have a place to dwell, but also the fact we get a tax free pot at the end.

mystic_trev

Conrad wrote: »

Op you imply surprise that people would use the equity granted by the market towards their pension. Why?

Come on Conrad, you've been on these Forums long enough to recognise 'irony'

Conrad

mystic_trev wrote: »

Come on Conrad, you've been on these Forums long enough to recognise 'irony'

I've the memory of gnat.


I often see pious posts along the lines a home is not an investment, well for a lot of people it really is.

IveSeenTheLight

mystic_trev wrote: »

Your Home could really be your Pension!



http://www.thesundaytimes.co.uk/sto/business/money/article1419690.ece

I used to be against these type of schemes as it is companies securing a percentage of your home and then having to pay a rental on that portion.
In an environment where prices are increasing the lendee is capitalising on both fronts (gain on equity increase and proportional rental)

That said, if a person is struggling in retirement and would have a better quality of life by releasing some of that value then why not?

Graham_Devon

Don't see a problem with the idea personally.

However, we will have to give up the notion that all the HPI gains will be passed onto the next generation as is often put across on this forum. With many of these equity release schemes, there has always been uncertainty of security putting people off doing it.

With the government offering it though, a lot of that uncertainty has now gone, so I'd expect an increase in equity release.

It does however raise the issue that the government has got an even greater stake in the property market. Not only guaranteeing mortgages one end, but offering equity release the other. The interest in keeping property prices where they are only grows, and I'm not too sure I'm comfortable with the government have such a vested interest at such high house price levels.

wotsthat

Graham_Devon wrote: »

However, we will have to give up the notion that all the HPI gains will be passed onto the next generation as is often put across on this forum. With many of these equity release schemes, there has always been uncertainty of security putting people off doing it.

Equity release will see the next generations get their hands on the money even quicker.

PasturesNew

My plan is to just downsize... as I've been looking at buying a house I've kept my eye on how much retirement places cost and so I know how much it's possible to get from selling up and downsizing at about age 65 (if I get that far).

Many people talk the talk ... but they don't want to downsize..... they refuse to, they want to stay in their homes. For me... I can't wait to cash in .... it's a balance though between not dying before I do ... and still having "enough life left in me" to blow all that equity on nice things and doing stuff before I'm too old.

People are happy to say they want to downsize, until they see the size of those smaller properties and find that a place costing half their current house only gives them about 20-25% of the space.... so they go off the idea.

wymondham

PasturesNew wrote: »

My plan is to just downsize... as I've been looking at buying a house I've kept my eye on how much retirement places cost and so I know how much it's possible to get from selling up and downsizing at about age 65 (if I get that far).

Many people talk the talk ... but they don't want to downsize..... they refuse to, they want to stay in their homes. For me... I can't wait to cash in .... it's a balance though between not dying before I do ... and still having "enough life left in me" to blow all that equity on nice things and doing stuff before I'm too old.

People are happy to say they want to downsize, until they see the size of those smaller properties and find that a place costing half their current house only gives them about 20-25% of the space.... so they go off the idea.

Very, very wise of you. Accepting you need a smaller place should occur naturally, but as pastures says most don't do it...

thequant

I've no problem with these kind of schemes and it was only a matter of time before this idea became mainstream.


Fact is we do have a housing crisis but we also have a pension crisis.


It is stupid and unfair that people live their old age in poverty at the tax payers expense just so we can give their children a nice inheritance.


Downsizing and equity release is already part of my retirement plans.


After all I can't take with me when I'm gone!