Releasing Equity

springs65

Don't know if this is the right place to post this but here goes.
My husband (age 63and still in employment) and myself (aged 62 and retired with only a very small pension) have been thinking about equity release. We have recently re located to Norfolk and had to spend all our savings on re vamping our bungalow. We have thought about releasing some equity from the house so that we would have money to fall back on or for holidays when my husband retirers. Has anyone done this and can give any advice on which may be our best option as I think there are a few ways to do it.We did take out a small interest only mortgage to help with the alterations we needed to do but with the many problems we have had this is almost gone too.

Many thanks
Cindy

Errata

I think there's a factsheet on ER on the Age Concern website, and also info on Norwich Union's.

EdInvestor

We have recently re located to Norfolk and had to spend all our savings on re vamping our bungalow..... We did take out a small interest only mortgage to help with the alterations we needed to do but with the many problems we have had this is almost gone too.

Usually what happens at retirement is that people downsize by selling their old family home and buying a smaller retirement home, thus generating an additional cash lump sum which they can invest to get more income.In your case the situation seems to be the opposite

Have you considered going back to work for a couple of years to pay off your new mortgage?You are really too young for equity release - you will get a much better deal when you are both 70.

NAR

EdInvestor wrote: »

You are really too young for equity release - you will get a much better deal when you are both 70.

And what if per chance they both do not live beyond 70, or are not fit enough to enjoy the benefits then of equity release?
The OP's query is certainly a good one and deserves an informed answer.

EdInvestor

Some more info

You cannot borrow much if you are young - and they will have to use a chunk of what they can borrow to pay off the existing mortgage.Also the younger you are, the poorer the terms.

margaretclare

Hi

I had an existing mortgage from 1990 and this would have continued until we (my second husband and I) were 83. We released 25% of the equity on this 2-bedroom bungalow for the specific purpose of paying off the mortgage. We didn't do it to 'fall back on for holidays' although we could see pleasanter uses for the £260 or so (would be more since all the Bank Rate rises!) every month.

Ours was a different scenario though. We had to be 68 before we could release the 25% and the value had shot up - £140K when we did the equity release, now approx £175K, was £58K when I bought it (in my first marriage, he died 18 months later coincidental with my redundancy).

I agree that often bungalows need a lot of work. Several around where we live are being sold and done up at present - built in the 1920s/1930s, lived in by an older person who's since died, they'll need mega work done to bring them up to modern standards. We just finished ours - new roof and all! Mega, mega work.

We both worked until we were 67, so no big deal really about working - provided you can find a job.

HTH

Margaret

springs65

Hi
Many thanks to everyone for your advice. I would love to go back to work but ill health prevents me.I have Arthritis in many of my joints and often in quite a lot of pain. We moved here to Norfolk to be near our only child a daughter so if I get worse there will be someone here to help me. We bought a detached bungalow only 5mins away from her but as Margaret said itthe previous owners were old people that had passed away so it needed every room re modernising. Would think it would be worth quite a bit more now than when we bought it. We are both still very young at heart and like to get out and about whenever we can and we do enjoy our holidays.

I think we will take some time to shop around and take as much acvice as we can from anyone before we make any decisions on what to do. We did know we would have to pay off the mortgage we took out before we could go ahead with any ER
Again many thanks to all who took time to post and anymore advice would be very welcome

Regards
Cindy

moanymoany

Have you thought about downsizing to a semi or terraced bungalow?

missile

I would advise against equity release at your age. You might want to let out a spare bedroom for some extra income.

margaretclare

moanymoany wrote: »

Have you thought about downsizing to a semi or terraced bungalow?

I think they've only recently moved, if I read the OP's post correctly. It would cost a lot of money to sell and buy, even if you only move to the next street! What with estate agents' fees, surveys, legal, removal, money that could be better spent on the home improvements/upgrading that are needed. That's IF there is a suitable semi/terrace close enough to daughter, which is why they moved!

Margaret

springs65

That is quite right Margaret, we moved about 16months ago. We bought this place for roughly the same money we sold our semi bungalow in Yorkshire. All fees etc came from our savings. We did budget for all the alterations that needed doing but have been unfortunate enough to have had problems with just about everything we have done which has eaten all our savings up and more, that is why we took out the small mortgage. You don't know about these things until you get in. Everything almost finished now but no money left, don't like to feel in this position, never know when you might need it.
Still undecided on what to do regarding ER so will think about that for a while. Many thanks to you all for advice.

Cindy