Equity release – raising money from your home

GoingSolo

What are the pitfalls?

Should have my own property soon that won't be mortgaged. Property value £200k. I'm debt free, no credit card issues etc. I'll have some savings also. Works pension to pay the bills and have some money left over each week.

But I don't want to leave £200k to family. Came into this world without so want to leave it the same way. I'd rather enjoy what I've worked for so would like to raising some money from my property.

So which companies have you used and or come recommended?

kingstreet

Seek advice from a specialist broker or IFA with lifetime mortgage permissions.

There are various "equity release" options and you need to establish which is the best for you and for which ones you are eligible.

All lenders for consideration should be part of the Equity Release Council.

kingstreet

More here;-

http://www.equityreleasecouncil.com/home/

eddddy

Equity release is essentially a mortgage where you never make any repayments. So the amount you owe goes up and up.

So depending on your age and life expectancy, don't set your expectations too high about how much equity you can release.

A Guardian article suggests:

If you are 65 and have a mortgage-free home worth £300,000, Aviva will offer a maximum equity release "lifestyle" loan of £87,000.

... after 20 years you will owe £343,000, and after 25 years the sum will be a staggering £483,000.

Link: https://www.theguardian.com/money/blog/2013/mar/16/equity-release-older-people-cash

So if you are 65 with a house worth £200k, that suggests they would lend you £58k. (If you're younger than 65, they would lend you less.)

The Guardian article also says:

There is a reason why equity release is still a niche market in Britain. It's because it simply doesn't work, and should only ever be used as a last resort by much older pensioners desperate for cash.

bruich76

In sort, you would be better of selling your house and renting a smaller one.


Then you could live off the full sale proceeds.

sheff6107

That article is drivel. You have to know what you are getting yourself into and work out your own figures.

It's like saying all life insurance is a waste of money because you knew somebody who paid out £100,000 and only got £40,000 when they died. Every financial product is different for each person and you should always take advice from a professional, not a newspaper columnist.