Equity release

Keep_pedalling

MEM62 wrote: »

OP I salute your good intention and understand your motivation. However, from the brief details of your circumstances as you have explained them, any form of equity release is absolute madness.

In truth, you are just not in a position to assist your sons.

Would you like to expand on why it is madness?

phillw

Keep_pedalling wrote: »

Would you like to expand on why it is madness?

They rarely represent best value for money.

I'd have thought there would be a way of getting the OP's property secured on the childrens mortgages.

Keep_pedalling

phillw wrote: »

They rarely represent best value for money.

I'd have thought there would be a way of getting the OP's property secured on the childrens mortgages.

Rarely best value option, but when all your assets are wrapped up in your home ER is the only option if you need to raise cash.

phillw

Keep_pedalling wrote: »

Rarely best value option, but when all your assets are wrapped up in your home ER is the only option if you need to raise cash.

They don't necessarily need cash. Mortgages don't require deposits from first time buyers because they need cash, or as an attempt to prevent people from getting a mortgage. It's to make sure there is enough equity in case they default.

It should be possible to secure a mortgage on more than one property. I would certainly pursue that before equity release.

Keep_pedalling

phillw wrote: »

They don't necessarily need cash. Mortgages don't require deposits from first time buyers because they need cash, or as an attempt to prevent people from getting a mortgage. It's to make sure there is enough equity in case they default.

It should be possible to secure a mortgage on more than one property. I would certainly pursue that before equity release.

Even if possible, securing a mortgage on the OPs house puts him at risk of losing his home, going down the ER route does not do this. I am not saying he should do that as there are other things to consider, like how will he be able to finance major future repairs if all his ER has gone to his children

MEM62

Keep_pedalling wrote: »

Would you like to expand on why it is madness?

OP is approaching retirement and is in a position where is accommodation is bought and paid for - therefore offering no small measure of security in his retirement. Equity release at his age would release very little capital in relation to the full value of the property and, depending on the arrangement, he will face a whole raft of restrictions if his circumstances change. For example he might not be able to move of have the property altered to suit his needs should he need to do so in later life.

The OP is effectively giving up what is probably his largest life-asset for a fraction of it's value. He also gives up all flexibility in his own living arrangements. Equity release is a product for the desperate, not a product to assist his sons, who presumably are still working and able to pay their way in life.

The question you should ask is 'what part of this arrangement would NOT be madness?'

Jay53

Apologies for late reply.
Letting agents tell me I would need to earn at least £26,000 p.a. to rent a one bedroom flat for £750+ per month.
My main gripe about the whole situation is that both sons are struggling to pay someone else's mortgage for them - as would I, if I rented.
All the replies & advice I've had on here have been much appreciated & have certainly given me food for thought !

inland_andalucia

Equity release doesn’t come cheap. A lifetime mortgage can cost more than three times what you borrow after 20 years, while some home reversion schemes demand more than 70% of your home’s value for just a 20% advance.

Nebulous2

I've always regarded the name 'equity release' to be entirely unsuitable. It implies the equity is trapped in your house and you are somehow freeing it. It's debt folks, wrapped up in a fancy package.

People have often spent 300 months paying for their house, resenting the cost every month. They celebrate when it's done and then a few years later dive right in again.

Malthusian

Nebulous2 wrote: »

People have often spent 300 months paying for their house, resenting the cost every month. They celebrate when it's done and then a few years later dive right in again.

Indeed. The OP complains about the sons paying someone else's mortgage but by doing this they would have spent one half of their life paying their mortgage lender's mortgage so that they could spend the other half paying the equity release lender's mortgage, and between the two they would have spent far more on other people's mortgages than if they'd rented all their life.

If the sons pay a ridiculous amount of rent each month and want to save for a house deposit then they either need to move to a less ridiculously expensive flat or drop the idea. I am not judging them, just setting out their choice.

If the sons can't save for a deposit now, how are they going to save up for the cost of repairs and maintenance when they're homeowners?