Is equity release really so bad?

agarnett

atush wrote: »

Very good points

but I live rurally, and want to move closer to town when we are older. Want to be able to walk to things. Another reason is, many of our friends in larger houses out here have moved (one has moved to a place in FL near our house there). Others have downsized into smaller places closer. I dont want to look after 2 acres when I am away all winter?

2 people dont really need 2 acres. 5 bedrooms. 3.5 bathrooms and 3.5 receptions really. Just costs money to heat.

I got a brand new combine harvester and I'll give you the key
Come on now, let's get together
In perfect harmony
I got 20 acres and you got [STRIKE]43[/STRIKE] .... 2 ???

Er ... maybe not then, darlin' !

https://www.youtube.com/watch?v=QZY6jC5Dh6c

Thrugelmir

agarnett wrote: »

I have been told that the Lifetime mortgages Aviva sells as this Equity Release thing are only life-long mortgages as long as the surviving mortgagor lives in the mortgaged home. At the moment the last mortgagor standing goes into residential care the mortgage has to stop in the same way it would stop upon last survivor death, and the property generally would be sold to satisfy Aviva's need for something between any inheritance guaranteed amount and the full value.

Sounds a bit wobbly ... sounds like Aviva may be using this product to gamble on people being more likely to go into care before they die than not.

Can anyone confirm?

The stat speaks for themselves. So this isn't the case.

agarnett

There's lies, damned lies and stat ...

But can you confirm one way or the other, Thrugelmir ?

I think I am right in saying that most people do not die at home.

If they live long and they DO die at home which is on an equity release mortgage, then Aviva or whomever is the mortgagee, may get the thin end of the deal.

So what's the stat you are referring to, please ?

jamesd

The statistics are very clear that most people do not die at home. More than 50% die in hospital.

Sticking to only the subset of people who die from age 85 onwards, in a study in Cambridge most died away from home. Only 69% were living "in the community" at any point in the year before they died and that fell to 39% of those with cognitive impairment. Hospitals were the most common place of death except for those with cognitive impairment, who mostly died in care homes.

Overall around 30% of people end up living in care homes at some point but the definition of long term care may be much broader than that and could include cases where a return home is practical at some future date.

It's important to know the definition of long term care used by an equity release product because that can greatly affect when a property will be sold. The product provider has an in profit-maximising desire to sell as soon as possible, while buyer may not even know enough to ask when a product is often purchased decades before death.

It seems most likely to me that buyers will over-value the level of protection provided by "guarantees" such as that offered by Aviva and hence will overpay for them compared to what a rational and well-informed consumer should pay. It also seems extremely likely that buying life assurance or life insurance will be substantially cheaper.

It's unlikely that a solicitor assisting with a sale will be aware of issues such as life expectancies with various health conditions and probabilities of dying at particular ages or locations.

kidmugsy

atush wrote: »

2 people dont really need 2 acres. 5 bedrooms. 3.5 bathrooms and 3.5 receptions really. Just costs money to heat.

Pah, what's your Miliband number i.e. how many kitchens?

kidmugsy

mumps wrote: »

This was some time ago so newer regulations may have overcome this.

I suspect that very few genuine economic problems can be overcome by new regulations. Usually they make things worse.

RobinHerts

If there was any chance you may return to your home the plan wont end, so staying in hospital or respite etc would end the plan. Long term care is classified as zero chance of returning to the home. In this case only will the lender ask the plan to be repaid. Remember, its all covered from a legal point of view.

RobinHerts

I meant hospital would NOT end the plan. Sorry

atush

kidmugsy wrote: »

Pah, what's your Miliband number i.e. how many kitchens?

Only one as I am not a poncy London type. Here in the boondocks, we use our gas grill or fire pit as kitchen no2.

Plus one memorable winter when we had no power for 3 days, I cooked on the log burner in the lounge lol