Equity Release

garyandlynn

Can someone please try and explain equity release to us please? My wife has approx 34,000 left on her mortgage, value of house is approx 123,000. One equity release firm said she could get around 38,000. Does this mean she gets that amount and then the firm sell the house when we both die? Do we have to make any loan repayments?
Confused.com!!!

Dan-Dan

Even the most rudimentary search revels plenty of info


https://www.moneyadviceservice.org.uk/en/articles/equity-release

garyandlynn

so helpful!!!

theartfullodger

garyandlynn wrote: »

.....My wife has approx 34,000 left on her mortgage, value of house is approx 123,000. .......

Normally a mortgage in just one person's name means so is the property and you as a husband have limited rights should she pre-decease you (or tell you to go!). Regardless of what mortgages & equity release deals have been done.

(I'm in the same position: Wife owns wholly house we live in: She can (largely) tell me to get out.... Hence my user-name,,,,)

However, nothing to stop her giving a "life interest" to you in her will...so you can stay there is she does go 1st...

AnotherJoe

theartfullodger wrote: »

Normally a mortgage in just one person's name means so is the property and you as a husband have limited rights should she pre-decease you (or tell you to go!). Regardless of what mortgages & equity release deals have been done.

(I'm in the same position: Wife owns wholly house we live in: She can (largely) tell me to get out.... Hence my user-name,,,,)

However, nothing to stop her giving a "life interest" to you in her will...so you can stay there is she does go 1st...

That presumably will severely limit how much an ER scheme will give you.

eddddy

garyandlynn wrote: »

Can someone please try and explain equity release to us please? My wife has approx 34,000 left on her mortgage, value of house is approx 123,000. One equity release firm said she could get around 38,000. Does this mean she gets that amount and then the firm sell the house when we both die? Do we have to make any loan repayments?
Confused.com!!!

In simple terms, equity release is like taking out a mortgage... except that you never make any repayments. So the interest owed just keeps mounting up.

And like you say, you can arrange it so that when you both die (or go into care), the house is sold to pay back the loan, plus all the interest that has built up.


So again, in simple terms, it's likely that the company have guessed how long they think you will live, and decided that if they lend you 38,000, the eventual house selling price when you both die will be enough to pay off the 38,000 plus all the interest.

I would guess that they expect you to pay off the 34,000 mortgage with the 38,000 - so you would end up with 4,000 cash.


These schemes vary - some are very bad. Don't go with the first company you find. Get some independent financial advice.