Equity Release

Izzycee

Hi all,

New to these forums so bear with...

My dad has no mortgage on his property due to my mum passing away when we were little. He is now approaching retirement and his pension will be very small. An idea for him to supplement his income in retirement is to renovate his current property and rent it out which can help pay for a smaller property and basic living costs. Only thing is we need to raise the capital for renovations.

Say he needed £30K...what's the best way to do this? We have looked into equity release but I'm not sure you can rent out the property this way. His age and income means remortgage may not be feasible. Any suggestions? Any welcome!

And yes we have thought about selling and downsizing but due to sentimental reasons (as you can imagine) not all of the family is comfortable with this idea and wants the property to remain in the family

winspiration

Surely Dad's welfare should come before sentimentality over bricks and mortar?

If family members want to retain (rather than inherit) the property, why not buy it from him now and let him get on with a more comfortable retirement, with no concerns about renovation or the responsibilities of being a landlord. They can let it out themselves if they don't actually want to live in it.

Both of my Dad's wives died young, the first time leaving my two brothers and the second time, me as young children. Dad brought all of us up, with a bit of help during school holidays from in-laws. A few years after retirement, he was struggling financially. After a family pow wow, he sold the house which was also in need of renovation (so sold quickly at a realistic price) and moved into sheltered accommodation. Far better for him - he had a small place at a reasonable price that he didn't need to worry about maintaining and plenty of money to continue with a good social life and holidaying in this country a couple of times a year. By the time he passed away, there was just about enough left for his funeral and quite right too - I'm so glad he enjoyed spending his money, he'd earned it!

GDB2222

I tend to agree with winspiration. Nevertheless the answer to your question is to get a buy to let mortgage . Talk to a mortgage adviser.

Also, what you are proposing will not be tax efficient. Dad will pay tax on the rent he receives. Is there really going to be enough left over after tax to pay the mortgage plus rent on the new place plus leave something over for living? There are lots of costs being a landlord.

It might be better for him to sell up, buy a new place, and invest the balance.