Help on equity release - is this a good price?

Hi
I'm trying to sort out the best option for my parents for equity release.

They are unable to remortgage due to unaffordable costs. They are 67 years young.

What they wish for is around £15,000 taken out of their property worth around £85,000.

They have no mortgage on this property.

They have little to no debt.

We have spoken to a broker who has priced this product at around £2,500 costs - this is the full cost.


There is £250 in broker fees and the £1,195 is the arrangement fee within this price.

There is arrangement/admin fee to cover their costs including legal costs.


They have the option of paying the interest at the end of the year to kept the figure at £15,000. This works out at around £650. The interest rate is around 5%.


Any help or confirmation to let me know if this offer is decent or not would be appreciated.

A loan is also unaffordable - they have around £50/£60 per month "spare" which would pay for the interest on the equity release.

Cheers.
Chris
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Replies

  • amnblogamnblog Forumite
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    No-one on here is placed to comment on whether an offer is decent.

    We don't know the detail of the case.

    We can say the broker fees are modest and the Lender's fees typical.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • chrisjoannechrisjoanne Forumite
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    Hi
    Thanks for reply.
    I fully understand it would be difficult but had hoped (as you have stated) that the price seems "typical". We thought the price seemed acceptable but wanted a confirmation the price is "normal" under these circumstances.
    Thanks
  • foxy-stoatfoxy-stoat Forumite
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    Hi
    Thanks for reply.
    I fully understand it would be difficult but had hoped (as you have stated) that the price seems "typical". We thought the price seemed acceptable but wanted a confirmation the price is "normal" under these circumstances.
    Thanks

    I dont think anyone is going to say anything that has any meaning, I have seem many threads on here about folk who have taken out these schemes, it may be the best move now but maybe not in 10 years time.

    Can they not sell the property and move into a cheaper one?

    Can you not take out a £12,000 loan out and gift them the cash?

    You will save them years of financial uncertainty should anything change in the future and help out your parents.
  • chrisjoannechrisjoanne Forumite
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    They unfortunately made an error with their last mortgage...it started out as repayment then my father lost work for a while. He then used visa cards to make payments and this got out of control with the APR at around 30% the bills were coming in fast. He then changed to an interest only mortgage on wrong advice from a financial advisor.
    All this went on without the family knowing.
    Eventually we got things sorted by paying off the cards as "full and final payments" (help from MSE again on how to do this) and also told them they need to sell to pay off mortgage and down size.

    So the position they are in now is excellent. No cards (all cut up). Mortgage free. Same bills coming in month after month with no surprises.

    We've gone through all my parents bills and they can comfortably afford £50/£60 per month (as stated this would pay the interest on the equity release).

    I'm not in a position to get a loan in my name and the only way the equity could be paid sooner is if my brother sells and downsizes - which may happen in next couple of years. However, if this does happen there are penalties on the cheaper APR rate. I think paying off soon with no penalties is around 6.5% APR.

    We are looking at both options for them - the second may possibly be better.

    Thanks
  • TrickyDicky101TrickyDicky101 Forumite
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    Why do they want to borrow this money? If they only have £50-60 spare per month, what will they do if the unexpected happens and they suddenly find their costs increase?
  • chrisjoannechrisjoanne Forumite
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    Nice personal question straight to the point. Does it matter?
    I'd rather not say if you don't mind, thanks.
    I did say "they can comfortably afford £50/£60 per month".
    A loan would be around £140 which is "unaffordable" - at present.
  • Nice of you to look after your folks like this its not something I see a lot of.

    The house value is modest as is the loan, the deal is what it is but there is nothing to stop you exploring different options with another equity release adviser firm. Have you considered as you are likely to inherit the property one day, perhaps you and your brother if possible could put 1/3 towards the cost of paying off the interest every year? It would free up that little bit more for your folks to enjoy their retirement and it wouldn't cost you much.

    Just a suggestion don't think I'm judging.
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • chrisjoannechrisjoanne Forumite
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    Hi

    Thanks for input.

    My father does not want us to help out as he feels the errors which he made in the past still need to be rectified somehow - he believes doing this "by himself" gives him a bit of positivity that he's sorting out his own problems.

    He wants to try and pay the interest on the equity release over the foreseeable future himself.

    However, me and my brother have already spoken about the possibility if anything went pear shaped we would both step in to pay the interest on the year which is obviously a small amount in the grand scheme of things.

    My father has worked extremely hard all his life with nearly nothing to show for it - they may not have had anything to their name as the bankers were totally ripping them off with his visa APR. (I believe he was paying around £350 per month just on interest alone at one point) - absolute joke. Unfortunately he was unaware how APR worked and this spiralled out of control.

    The money they will take out the house is to treat themselves to something - which they deserve.

    Thanks
  • Hi

    Thanks for input.

    My father does not want us to help out as he feels the errors which he made in the past still need to be rectified somehow - he believes doing this "by himself" gives him a bit of positivity that he's sorting out his own problems.

    He wants to try and pay the interest on the equity release over the foreseeable future himself.

    However, me and my brother have already spoken about the possibility if anything went pear shaped we would both step in to pay the interest on the year which is obviously a small amount in the grand scheme of things.

    My father has worked extremely hard all his life with nearly nothing to show for it - they may not have had anything to their name as the bankers were totally ripping them off with his visa APR. (I believe he was paying around £350 per month just on interest alone at one point) - absolute joke. Unfortunately he was unaware how APR worked and this spiralled out of control.

    The money they will take out the house is to treat themselves to something - which they deserve.

    Thanks

    Sounds like my Dad and late mother - both grafted all their life and now my Dads 70 and in supported living and sold house to pay for it and debts run up when out of work looking after Mum :(

    I know how proud Dads can be, but its good that he's prepared to live a little with the money they raise, hopefully the good memories will mostly offset the bad feelings about the credit card situation. Good luck with it all :)
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • chrisjoannechrisjoanne Forumite
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    Thanks for your kind words. :)
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