Equity Release

LeMans2005

Hi all. Looking for some advice here. The situation is:
Myself and my wife are going to be retiring in just over 2 years time. She's a teacher, and has a pension of around £1500 per month, she's also still teaching 4 days a week, so with her pension she's bringing in about £2600 a month. I'm self employed and making £1500 a month after tax.
We live in a house which is valued at £500,000 with an interest-only mortgage of £120,000 which is costing about £500\month plus another £300\month insurance as she's a smoker, due to finish in 2 years. We have savings of around £20,000. The house is in her name only, as we decided to go this way when I started my business some 15 years ago.
We are looking into the possibility of not having to sell in 2 years time and keepnig our existing house, and a friend suggested looking into Equity Release schemes.
What is anyone's view of these schemes and is there another way we could achieve this object? We could downsize, I suppose, but we have been living in this house in this village for 30 years so are reluctant to move away.
Any suggestions or comments would be greatly appreciated.

GDB2222

LeMans2005 wrote: »

Hi all. Looking for some advice here. The situation is:
Myself and my wife are going to be retiring in just over 2 years time. She's a teacher, and has a pension of around £1500 per month, she's also still teaching 4 days a week, so with her pension she's bringing in about £2600 a month. I'm self employed and making £1500 a month after tax.
We live in a house which is valued at £500,000 with an interest-only mortgage of £120,000 which is costing about £500\month plus another £300\month insurance as she's a smoker, due to finish in 2 years. We have savings of around £20,000. The house is in her name only, as we decided to go this way when I started my business some 15 years ago.
We are looking into the possibility of not having to sell in 2 years time and keepnig our existing house, and a friend suggested looking into Equity Release schemes.
What is anyone's view of these schemes and is there another way we could achieve this object? We could downsize, I suppose, but we have been living in this house in this village for 30 years so are reluctant to move away.
Any suggestions or comments would be greatly appreciated.

Mortgage cost is £500/mth. Is that all interest? That works out at 5%, which is rather high by current standards. Could you remortgage onto a lower rate and put the extra into paying off the capital?

Insurance £300/mth. Is that protection only? Again, that seems rather high. There's no endowment there to help pay off the capital?

Equity release at mid-60s (I assume) won't give you much capital, and it constrains what you can do with the house afterwards.

GDB2222

Won't you each be getting £160/week state pension?

WillowCat

I'd be looking to remortgage asap to the longest duration flexible repayment mortgage you can get (some lenders will lend up to 80 years old). You would appear to have a decent pension income between you (even if yours is only state pension) to service the mortgage.

You should have a good wodge of spare income at the moment, so throw as much as you can at the mortgage to get the balance down quickly. If you have the mortgage in joint names, and either one of you would be able to service the mortgage should the other one die (especially at a lower balance if you pay off as much as possible in the short term) then scrap the life insurance .