Equity release

Jay53

Hi, I'm considering equity release so I can give both my sons the deposit needed to get a mortgage. They each pay a ridiculous amount of rent per month so are unable to save for the deposit. Their mortgage repayments would be considerably less than their current rent, freeing up income for a better standard of living for them & their children (my grandchildren). I live in a small flat which is mortgage-free; I considered selling my flat and moving into rented accommodation but I don't earn enough to meet the financial criteria set by letting agents. Equity release has had bad press in the past, but appears to be the only way to help them. Any advice please ?

PeacefulWaters

Equity release can mean a mortgage you make payments on yourself or a mortgage where interest rolls up until you sell up or die.

How much is the property worth?

How much do you wish to borrow?

What sort of repayment schedule do you have in mind?

Jay53

My flat is worth about £160,000 , I would be looking to borrow approx £60,000 (£30,000 per son); I would opt for a payment-free mortgage as I am approaching retirement.

jonesMUFCforever

This might sound harsh but IMO let them get on with their lives.
£60k today will roll over into probably all of the equity should you live to say 85.
Your inheritance all gone?

Sarastro

To be honest, what's the point of waiting? I mean, you are effectively giving them their inheritance early - it's your money. My partner and I have always said that we want to help our family within our lifetime, i.e. now so we help those who are struggling as best we can.

There's a lot of me saying, get on with it. Enjoy the benefits of doing it now.

And, there's a bit of a reality check as well. You need to be sure that you are not leaving yourself in a vulnerable position in anyway, e.g. if you need greater care and support later on. You also need to be sure you're not being taken advantage of. I know they are your children, but eyes very wide open please.

Equity release can be quite harsh in terms of the deal, I think, which is why it's maybe had such a bad press. Are you sure there aren't other ways you could help? I'd say find yourself a good independent financial adviser and talk it through with them. Could you release some equity to buy a percentage of a house which they live in? They would have to pay rent for your share of the house, but there are probably ways to make this nominal. That way, you would still have an asset to your name and wouldn't be worse off.

badmemory

Would equity release at your age even free up £60k? You seem to be very young to take advantage of this.

forgotmyname

So your going to rent a property to give your sons a deposit on a mortgage?

So instead of them paying rent you will be paying rent instead?

Give them the money you would be using to pay your rent to help them purchase a property?

System

Jay53 wrote: »

Hi, I'm considering equity release so I can give both my sons the deposit needed to get a mortgage. They each pay a ridiculous amount of rent per month so are unable to save for the deposit.

Be truthful with yourself. Do they go out for meals and nights out, do they go have holidays, do they have fairly new cars on PCP deals etc? Those are the real reasons they can't afford a deposit, not the rent.

I live in a small flat which is mortgage-free; I considered selling my flat and moving into rented accommodation but I don't earn enough to meet the financial criteria set by letting agents.

That is absolute utter madness. You currently have a no doubt not very flashy but easily afforded living at the moment and you want to end up living hand to mouth just to help out kids who no doubt would be able to afford to save for a deposit if they'd made some sacrifices like you did when you got your first place such as knocking the holidays and going out on the head and banging in overtime for a few years?

My son recently made a hint of wanting me to help him out with a deposit this month when he found out we'd sold a house we used to rent out. I've seen how much money he and his partner waste on frivolous stuff so he got told that that door was well and truly shut and if they cut down on the spending they'd have a deposit in 6 months.

Herzlos

Can you downsize or re-mortgage?

You should be able to get a pretty decent deal on a £60k mortgage with £100k equity (37.5% LTV). Probably means you'd be paying less than you would in rent.

iolanthe07

Please take professional advice if you're going to do this. My parents-in-law were royally screwed over by a glib salesman and bitterly regretted taking equity release.

Jay53

It's not my inheritance, it's theirs, they'd be getting it now whilst I'm still around to see the benefits for them plus I'd still have a roof over my head.