Forum Home» Mortgage-Free Wannabe

Mortgage or Equity release

New Post Advanced Search

Mortgage or Equity release

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
6 replies 759 views
Life-must-be-easierLife-must-be-easier Forumite
8 posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
So here is the issue
We have a mortgage at 3.7%, 2 years to go until remortage is due (7 years in total until the mortgage is paid off) With early redemption if we pay it off now £55K, Property value now £230 - £235K, Im the youngest in our realationship but close to 60. Currently we have debts of £30K :eek::o(credit cards and loans all fixed rates), none of which are secured against the property.
No real savings:(
We have never had any CCJs and always managed to pay all our debts in full and most months a little more on each one, but money is tight (like it is for a lot of people). So we have seen an equity release company and they were NOT pushy just gave advice. :)
The dilema is? Get Equity Release, and pay off the mortgage, (no money left over afterwards) and then distribute that money that was being used for the mortgage (close to £700.00) over the outstanding debts and build up "Emergency Fund", Or stay as we are? but with no reserves for any problems.
We understand that interest is accruing against the "Paid Off Mortgage" and this is going to be at 4.7% forever and a day.
By the way, we don't have nice holidays just a couple of weekend breaks a year, and drive an average unfinanaced car, we both work full time.:(
Has anyone else tried this, did it work for you, any advice as it's a bit of a dilema.
PS The kids are sorted and have their own mortgages.:D

Replies

  • LadyGnomeLadyGnome Forumite
    596 posts
    Sixth Anniversary 500 Posts Name Dropper Combo Breaker
    ✭✭
    This article might help you think more widely about the issue
    https://www.telegraph.co.uk/pensions-retirement/financial-planning/can-we-take-out-an-equity-release-mortgage-to-avoid-paying-care

    I know you want the Equity Release for a different reason but my first thought was the deprivation of assets issue if you needed benefits or care paid for. Debt repayment may be an acceptable reason for reducing assets. Think also about the compounding of the interest, were you given an illustration of how the amounts you owe would build up, especially if you live to a good age?
    I think you need to look carefully to check that you are not storing up problems for the future when you may be less able to cope with them to fix an immediate pressure.
    I am not saying whether or not you should do it but make sure you understand fully any long term implications.
    Mortgage
    Start Nov 2012 £310,000
    Apr 2021 £180,773.53
    Reduction £129,226.47

    End Sept 2034 (but I have a cunning plan...)
  • Thanks for the post, it's good to have a different perspective, and no we were not given a forecast, I will ask for one today. Best wishes.:)
  • Hi LadyGhome
    That's a brilliant artical, thanks again
  • So, after investigating deeply, Equity release does not seem so good, this is based upon trawling the net and reading various articals (one suggested by Lady Ghome.

    Next option, contacted the mortgage broker and asked for a top up on the mortgage to apy off the debts, but even though the mortgage, was aware that we never had any outstanding payments, or missed any payments on anything, and that we pay over the odds, and a massive equity on the house, they turned us down as they said that we did not have enough funds? How doies that work out??

    Is there any other route, (that anyone has had any experience with) Debt Management Orders etc, taking into account that we will have to renew our mortgage in 2019 for the final five years. And don't want to shoot ourselves totally in the foot.

    Any advice is welcome
  • newgirlynewgirly Forumite
    7.9K posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    ✭✭✭✭
    Even if you don't pass affordability to remortgage in two years with another provider , you can just switch to a new deal - that's the situation we were in, so it's doesn't mean you can only go to the standard variable rate.

    The best place for advice is the debt free board, remortgaging to clear debt is usually a pretty bad idea (we have also done it in the past!). You will get advice and support, best of luck :)
    MFW 67

    2021 £5,829.42/£16,400
  • Many thanks newgirly for the post, we will investigate and post on the debt board:T
This discussion has been closed.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support