Equity Release?

shezza2

Hi all, both my wife and I are aged 67 and we would like to release some equity on our home which is mortgage free. I have done a quick ready reckoner on the web and it looks like we can get around £50,000 So really what I would like to know does anyone on the forum have any experience of Equity Release? IE Good points! Bad points! Don't do it! ect. What I really do not want to do is release the money and start paying back payments. I am looking for a scheme where nothing is paid back until death of both of us. We do not have plans to move house, have no one who we will be leaving the property to. TIA.

dunstonh

I have done a quick ready reckoner on the web and it looks like we can get around £50,000 So really what I would like to know does anyone on the forum have any experience of Equity Release?

yes

It is an option of last resort but can be viable for those without dependents as there is no point taking it with you to the grave. However, for those with dependents, let them know. You would not believe how some children act when they find out that the parents had done equity release without them knowing.

There are many variations of products and features with providers. So, a local IFA or whole of market mortgage broker with equity release permissions is a good point of call.

Linton

We are using a lifetime mortgage, of which ER is one form, and have researched the topic.

ER is expensive with higher interest rates than a normal repayment mortgage but as Dunstonh says it can be useful in some circumstances. I do not see it necessarily as an option of last resort but rather as a possible sensible part of your overall long term financial plan. Like all debt you do not want to be in a position where you have no other choice. As you should be able to get more money the longer you delay it I suggest you do not take out ER early in retirement without a good reason.

You need to be aware that once you have started you could be significantly restricted with future moves. For example, although you should be able to take the mortgage with you if you want to move house you may not be able to downsize without paying off some of the mortgage. This could present problems if one of you dies and so should be planned for.

ER these days should include a guarantee that if the equity in the house is insufficient to pay off the mortgage when you die the remaining debt will be waived rather than charged to your estate.

You should use a whole of market IFA/broker with relevent qualifications.who will be able to find you the most appropriate deal from a range of different products with different costs and ts&cs. Another reason for using an advisor is that there are only a small number of ER providers at the moment some of whom are not well known and there appear to be new ones with different products entering the market, You cannot rely on using the standard mortgage companies whose name you know from experience or through advertisements. Note that unlike the situation with investment advice consultation should be free but a commission will be charged on completion.

shezza2

Is a lifetime mortgage the same as an Equity release? the reason I ask is that some or most of the equity release plans I have seen says Still own 100% of your house, Nothing to pay back until last person dies, and the amount to pay back would not be higher than the value of house.(and if it was higher where do they get that money from when were both gone) Which if there is no small print is ideal for us as we don't intend to move and have nobody to leave the house or money to.

dunstonh

Is a lifetime mortgage the same as an Equity release?

It is a form of equity release.

Modern equity release options are much better than the awful 1980s versions.