Equity Release

hughmungas1986

Hope I'm in the right thread. Apologies if I'm not.

I've only been told about this tonight so here goes.

My parents have decided that they want to release some of the value of their home, around £30000. They have valued their house at £150000. They are both in their late sixties.
They have approached a company who have given them a quote for the total amount repayable. They have been discussing a Fixed Rate Lifetime Mortgage which has a 6.2% fixed interest rate rolled up. I have only had a quick look at the figures and the repayment toals look quite frightening.
I am worried that if they release the money and eventually they have to sell up and move into care / sheltered accommodation that there will not be enough money from the sale of the house to cover all costs.
I am not worried about my ' inheritence' ( its their money they can do what they want ) but the fact that when / if I'm ever debt free, I'll have struggle for money myself in later life.
I'm sorry if this sounds two faced but I want them to do the right thing.
Does anyone have any experiences of equity release or any other suggestions ?

hughmungas

toonfish

the other alternative if they need the cash is a conventional mortgage where they make monthly repayments - then only £30K will be owing at the end but this may not suit their needs.

With regard to the amount to be repaid, don't forget that the house value will hopefully increase over the medium/long term too.

As long as the provider is a member of the SHIP (safe home income plan) scheme they can never owe more than the property is actually worth

EdInvestor

It would be cheaper if they downsized to a lower cost property and released equity that way. It might be doable if they only need 30k.Subsequently they could hopefully then have a further bite at the equity cherry from the next property in the future.

What kind of pension income do they have and what is the money needed for?

hughmungas1986

Not to sure about the pension income, 'adequate for our needs' I was told !!

The money is to spend on themselves / holidays over the next few years.

Any how I think I've persuaded them to sit down and have a rethink and speak to an IFA.

Hugh