Equity Release - I've lost my home

nobblyned

So they sold, say 50%, of their house to the bank and took the cash. This has left them with 50% of a house that has massively rocketed in value.

If instead they'd sold the whole house on the market at that time and taken the money (leaving them even worse off), would they be chasing the buyer now and claiming they'd been ripped off?

Generali

Didn't Barclays change their T&Cs in the customers' favour in around 2003/4 after it became apparent that HPI meant this cost their clients a packet.

dannyboycey

Jennifer_Jane wrote: »

trustworthy and ethical.

To some extent they are all as bad as each other, but I do bank with the co-operative bank and 'Smile' for this reason as they appear to be more ethically aware than other organisations.

maninthestreet

The man who sold his house to a bank/financial instiution, on the basis of a verbal assurance that he could rent the house back until he died, but was only given a 12 month contract - surely his solicitor dealing with the sale pointed out to him he was being offered a 12 month contract, and could be evicted at the end of the contract?

franklee

maninthestreet wrote: »

The man who sold his house to a bank/financial instiution, on the basis of a verbal assurance that he could rent the house back until he died, but was only given a 12 month contract - surely his solicitor dealing with the sale pointed out to him he was being offered a 12 month contract, and could be evicted at the end of the contract?

Yes. In this situation it's clear the tenant is not going to get a contract for very long. If the buyer needs a mortgage on the property the contract would most likely be an assured shorthold tenancy.

Early on when they were explaining he's been asked to leave we saw him clutching a bit of paper with notice requiring possession at the the top. So he's been issued with a section 21 notice and naturally thought he was being asked to leave. At the end they they gave the companies response which was that serving the notice was routine and they would be allowing him to stay. Which sounds familiar It's that ruse the Sword of Damocles right there on TV!!! Sorry it's not funny but I couldn't help :rotfl: that how the S21 is used even when the landlord hasn't yet decided he wants his property back was right there on TV. It demonstrated the uncertainty this causes tenants all right and made the company that brought the house look like they had gone back on their word.

hedgehunter_2

I watched this show with interest but could not help feeling at the end that it was a bit one eyed.

The first lady could not understand why having released 20k on a shared growth basis for 57% of the property why the estate should repay 57% of 290K. If that is the case than the estates share is in the region of £125k, and this is likely to be a far higher value than the total value of the property 9 years earlier.

If her mother died in 2006 why was she only moving out in July 2007?

Why did the guy in the caravan move out of his house, having taken a shared appreciation mortgage where he could remain in the property for the rest of his life why sell up?

The other couple who took a SAM regretted it and said that they sholud have taken a 5 year loan which would have been repaid by now. Surely the point of a SAM is that no repayments are made until death. Could they have afforded to repay capital and interest on 25K over 5 years?

There appears to have been a good eal of hindsight in this programme, not least when Jonathan Maitland asked the red faced lady from Barclays "whether it was Barclays job to know property values in 10 years time" (time travel not yet a possibility!)

scrummy_mummy_2

For those of you who read and fed back to my thread on my evil dead stepmother (Hosebeast) and the secret (Bournemoth based) druggie step sister 'issue' I posted a few weeks ago....on this issue of equity release...I DID manage to get my father to at least talk to me about the problem, but, because I tried to warn him (possibly a bit too vociferously) about the draw backs of this type of...I think my words were 'insane activity!'...he has now not spoken to me for 3 weeks and has told my sister that I was treating him like a child and telling him what to do instead of providing advice......I suggest it is people like my dad who are all juiced up by the headline of these offers (Get lots of cash for no return until you are dead!) who sign up...they are PREY!...another sector of juicy pickings in our 'give it to me now for no effort society'.
Luckily, he didn't sign, but I think it might take a degree of diplomacy to restore family relations accordingly!

If it sounds too good to be true, it probably is...always ask yourself, if a company has large corporate headquarters in London...where do you think they get the money to buy such property, it's not from altruistic activity such as giving poor old people money (kindly) as equity release...WIFM...What's in it for me people????

hedgehunter_2

This is a rather typical reaction to equity release.

If we are not careful, elderley people will be stuck living in poverty or disconfort because they have been frightened off equity release.

Why should elderly people not release equity to make their later years more confortable, often from their only remaining asset. People who take equity release often have little choice when they are facing mounting debt, little or no savings, a low income and ofter property maintainance costs at a time of life when they are least able to reduce maintainance costs by doing some of the work themselves.

Yes equity release is very expensive in the wrong circumstances, but for those people who criticise their parents from entering into these agreements, they really need to open their eyes to their parents financial position whilst they are alive rather than allowing a commercial organisation to step in. It would be a far cheaper option.

It is not uncommon for the family to kick off, after equity has been released, and after their parents have died about the cost of the repayment. They no longer have anything to lose because there is no one left alive to copunter their normal grumble that "they did not know what they were agreeing to"

They generally did at the time but it is not uncommon for people to then regret the transaction after the monmey has been spent or in hindsight.

WTF?_2

hedgehunter wrote: »

This is a rather typical reaction to equity release.

If we are not careful, elderley people will be stuck living in poverty or disconfort because they have been frightened off equity release.

Why should elderly people not release equity to make their later years more confortable, often from their only remaining asset. People who take equity release often have little choice when they are facing mounting debt, little or no savings, a low income and ofter property maintainance costs at a time of life when they are least able to reduce maintainance costs by doing some of the work themselves.

Yes equity release is very expensive in the wrong circumstances, but for those people who criticise their parents from entering into these agreements, they really need to open their eyes to their parents financial position whilst they are alive rather than allowing a commercial organisation to step in. It would be a far cheaper option.

It is not uncommon for the family to kick off, after equity has been released, and after their parents have died about the cost of the repayment. They no longer have anything to lose because there is no one left alive to copunter their normal grumble that "they did not know what they were agreeing to"

They generally did at the time but it is not uncommon for people to then regret the transaction after the monmey has been spent or in hindsight.

The real problem is that the only sure way to 'release equity' on a house is to sell it.

The SAMS scheme, which the programme started off complaining about, seems the fairest way of doing it as the owner effectively sells a share of their house to the bank - and gives them their share of the value plus some interest at time of selling the whole house themselves.

Had house prices not risen by silly amounts in the last few years it would have been much more favourable than simply borrowing against the value of the house at the time. If house prices had stagnated or fallen, the SAMS participants would have been quids in. They took a bit of a gamble and it didn't pay off, now they are moaning about it.


Other than that, the concept of 'equity release' is just another way to get people to borrow large sums of cash. The lenders especially like it because their loan is secured against a property. Often the borrowers seem to be under the mistaken assumption when they sign up that the loan doesn't really need to be repaid.

Just like people were brainwashed to think prices were going to go on rocketing upwards for ever, they have also been brainwashed into thinking that 'equity' is real money that they possess - it isn't.

hedgehunter_2

I can only agree with you !!!!!!, downsizing, if that is possible, is the only way to truely release equity.

The problem is that many older people have an understandable, but irrational attachement to their property even when it is too big or expensive for them to run and maintain, usually because it was the place their family grew up or because of neighbours and friends, and in later years of life many people cannot face or cope very well with change.

Used sensibly and intellegently equity release has its place for those who are relatively cash or saving poor but asset rich, and I get a little tired of winging relatives who by complaining about the cost of equity release after their parents have died are effectively saying, when they can no longer upset their parents, that they would rather their parents had had a miserable last few years of life and that they inherit more, than them choosing to release equity because in many cases they had little other realistic option.

These people could of course help their parents out at the time they need it. Unfortunately the family or heirs rarely do.