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Equity Release guide discussion

edited 30 November -1 at 12:00AM in Over 50s Money Saving
177 replies 69.3K views
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  • Nick_LovellNick_Lovell Forumite
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    tubbyewe said:
    Hi,
    Is there a general rule of thumb regarding percentage of equity that can be released from a house with no mortgage.  Eg at age 60 =10%   70= 20%    I'm on;y looking for ball park figures to base my initial musings on or am I being too simplistic?
    Cheers
    David
    David, there is approximate LTV's depending on age, and these start at around 25% LTV at 55 and go to about 49-50% at 80+. So for a guide you can get a ball park figure based on age - however, most websites will want your details so they can call you back. If you let me know the age of the youngest borrower I can give you an indicative amount you may be able to release.
  • tubbyewetubbyewe Forumite
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    David, there is approximate LTV's depending on age, and these start at around 25% LTV at 55 and go to about 49-50% at 80+. So for a guide you can get a ball park figure based on age - however, most websites will want your details so they can call you back. If you let me know the age of the youngest borrower I can give you an indicative amount you may be able to release.     
    Thanks Nick,
    I'm just forward planning really.   Currently 58, looking at buying a property and working out my options for accessing the equity further down the line, say at around 70.  My partner and I will not be worried about leaving an estate. My calculation is basically; if I know I can access XX% of the equity later, this increases the amount of my savings/investments I can afford to spend on the house now. Hope that makes sense.
  • Nick_LovellNick_Lovell Forumite
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    HI David - as an indicative figure at 70 years of age - you could access around 40% (+) of the property value. Hope that helps.
  • happyhackerhappyhacker Forumite
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    Throughout my financial life early on it became clear that the only party making money are the Banks. It's not easy to work out how a mortgage balances out with asset growth over the years but mostly never in the owners favour unless one works hard to pay the loan off early. EQRel is the biggest scam ever. All of us are the money pot they turn to keep their glasses full.
  • SilvertabbySilvertabby Forumite
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    Throughout my financial life early on it became clear that the only party making money are the Banks. It's not easy to work out how a mortgage balances out with asset growth over the years but mostly never in the owners favour unless one works hard to pay the loan off early. EQRel is the biggest scam ever. All of us are the money pot they turn to keep their glasses full.
    ER isn't for everyone.  However, in our case, we have no children to leave our £300K mortgage free home to and so haven't ruled out some form of ER in the future to pay for luxuries including a cleaner and a gardener.
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  • Gerry56Gerry56 Forumite
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    Throughout my financial life early on it became clear that the only party making money are the Banks. It's not easy to work out how a mortgage balances out with asset growth over the years but mostly never in the owners favour unless one works hard to pay the loan off early. EQRel is the biggest scam ever. All of us are the money pot they turn to keep their glasses full.
    I don't know why you say asset growth is mostly never in favour of the borrower?  On average, if you run a mortgage for 25 years the repayments and interest are rarely above 3 to 4 times what you borrowed.  Unless you've bought a real pup, the property will go up far more than that.  I just did a calculation online 250k at 2.5% is 336k over 25 years.  I would guess a 250k house will be worth a lot more than 336k in 25 years time.
  • Nick_LovellNick_Lovell Forumite
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    I don't know why the word 'Scam' is used when equity release is mentioned. It is heavily regulated and controlled by the FCA. Thankfully it exists and for many people it is a solution to meet their financial planning objectives. Rates are at the lowest ever, under 3% - who would offer you a pot of money, allow you to make no repayments and not see any return for 20-30 years? Of course lenders make money, business is about making money whatever industry you are in. Clients are given detailed financial advice and have to take legal advice as well before they commit to equity release. Of course it is not right for everyone, and certainly taking ER for business use should never be recommended. However, for many clients coming to the end of interest only mortgages it is a life saver. So those who keep shouting 'scam' 'rip-off' and con need to perhaps get a more informed perspective. My father-in-law is one of the nay-sayers and will not listen as he relies on his out-dated information to make a judgement. He just won't listen to how modern equity release works, spouting on about the 7 year rule, that it doubles every 7 years - which is of course complete rubbish.  Most modern ER plans will double every 20 years at current rates, of course against a back drop of house price increases.  Plus, it is always overlooked you can repay the interest or indeed repay both capital and interest and you remain the legal owners of your property - the lenders do NOT own your property - this is only true of home reversion schemes that are by and large best avoided and only viable in extreme situations.  It's odd how Retirement Interest Only mortgages offered by the likes of Nationwide are not frowned upon but a lifetime mortgage that is far more flexible, is judged as the work of the devil by many ill-informed people. 
  • Gerry56Gerry56 Forumite
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    Great post Nick.  I have been in many "battles" on other social media, accused of being a sales person and all sorts, just for explaining ER is really a form of mortgage.  Most of the naysayers tend to be those waiting for their inheritance but I think where it causes confusion is that people believe that if you have a mortgage, of any sort, that you don't own your property.  The truth is you do, every brick of it.  The mortgage is simply a loan with your property as security (sorry, teaching you to suck eggs). After all, if the property wasn't yours, how could the lender use it as security, and if it did belong to the lender why would they need to go to court to repossess it?  You don't have to repossess something you already own....  rant over.  Thanks again.
  • TELLIT01TELLIT01 Forumite
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    I think the claims of 'scam', 'ripoff' etc come from the days before the market was properly regulated.  Situations where there was negative equity in the property, or people wishing to downsize and discovering they didn't have enough equity left in the property to do so and were therefore trapped in their existing properties.  As I understand it, those days are long gone.
    We have no children and will definitely look at equity release options once my wife retires in a couple of years time.  Members of the extended family are welcome to whatever is left once we pop out clogs.
    A national newspaper recently advertised a free equity release guide which I requested.  A couple of weeks later I had a phone call asking if I had received it.  I confirmed that I had and the person on the phone then started trying to ask questions about our personal situation, ages, finance etc which I refused to answer.  They actually got quite agressive on the phone basically accusing me of wasting their time and asking why I'd asked for the guide if I didn't want to take out an equity release product.  I explained that all I want to do is investigate the options and hung up on them.
  • edited 21 November at 4:14PM
    missilemissile Forumite
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    edited 21 November at 4:14PM
    You must take independent advice before EQ and charges seem high.
    For those of us who qualify, an (ROI) retirement interest only mortgage seems a much better option to release capital.

    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
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