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Equity Release guide discussion

edited 30 November -1 at 12:00AM in Over 50s Money Saving
197 replies 76.6K views
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  • Smifthy1234Smifthy1234 Forumite
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    MoneySaving Newbie

    Hi!!

    Sorry, maybe a bit of a complicated one here…

    I have inherited a property in Spain (around £70k value) and money 10K of which I’d like to use for a deposit for a mortgage in the UK. Ideally I'd like to rent out the place in Spain and purchase a property in the UK around the £110k – £130k region.

    My income is £26k, no debts, clean credit history. Have been in the same job for 4+ yrs. We are currently renting (£615 per month) and have been in the same property for 15 yrs (wasted money grrr!). 

    1) Is there a way I can use some of the equity (around £30k) in the Spanish property to use towards a deposit / mortgage in the UK?  

    2) Is there options to pay the equity back in full through monthly payments?

    3) Do you know of any of any specialist brokers / advisors I could approach about this?

    4) Do you think equity release is the most suitable options for our circumstances or is there a different approach you would take?

    Many thanks in advance for your help.

  • Savvy_SueSavvy_Sue Forumite
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    Specialist brokers / advisers: I'd start with an 'expats in Spain' type of place. You need someone who really knows their stuff re:
    • inheritance
    • renting out (I know the requirements changed, at least in some places, a year or so ago to require all rented properties to have air-con)
    • tax rates on rental income
    • other taxes (the equivalent of council tax can be a b*gger because the municipality can arbitrarily decide on the value of a property and base the tax on that, despite actual sale prices falling through the floor in recent years)
    • getting the money out of Spain to use in the UK
    Forgive me if you've already thought of all of the above. Unless the property has already been rented out and shows a consistent strong booking history, you'd have to think long and hard about whether it was likely to be suitable; in the short term whether it would be attractive to the domestic Spanish market; and in the longer term whether it would be attractive to visitors from outside Spain. Obviously it's been a while since we were in Spain but there was a glut of property rentals even then, plus a glut of rentals for sale. 

    I do hope you can work something out to make use of this ... 
    Still knitting!
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  • Nick_LovellNick_Lovell Forumite
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    You won’t be able to release any equity from a Spanish property via any UK Equity release lender. Equity release is only available to U.K. properties and generally have to be your main residence. Whether you can arrange any mortgage options in Spain is something I can’t answer. On the face of it you may be able to raise a standard mortgage based on income and the £10k deposit. You did not mention how old you are, so not sure on term being suitable. Sorry can’t really help any further on this. Hope it works out.
  • missilemissile Forumite
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    Be very careful, renting property in a foreign country can be high risk. Do you understand the Spanish rental market? You might want to read this > Tenant Eviction Nightmare -Part 2 - British Expats 
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
  • mummifiedartistmummifiedartist Forumite
    1 posts
    First Post
    MoneySaving Newbie

    I am acrimoniously separated from my spouse who still lives in our marital home. I have fended for myself without any financial assistance but was made redundant in September 2020. Having fled for my own safely in 2012, I currently live in a council-owned, one bedroomed bungalow within a sheltered scheme. My income alone qualifies me for £1.55 per week Pension Credit (Savings Credit) but the DWP have refused to disregard my interest in my former home. I have tried appealing to them and the Council without success.

    I cannot afford a solicitor (although I had one when I was working who began separation proceedings and submitted my application to the court) and domestic matters don't qualify for legal aid. I've approached the Citizen's Advice Bureau and Age UK but got nowhere.

    The DWP have told me that I must sell my half of our jointly owned, mortgage-free property to a third party but refuse to speak 'off-script' as to how that might be achieved.

    I wonder whether Equity Release might be an avenue to explore but what do people here think about the possibility of actually raising some money?

    This is just to live on and not for any one-off capital expenditure.

    My ex has resolutely refused to respond to solicitor's letters, or the court's acknowledgement of service request and is clearly intend on staying put by repelling all boarders. Despite saying for years that the answer is to sell up and divide the money, we are 20 years (yes 20!) down the line and I am now pretty desperate.

    The chances of a valuation visit being permitted are slim. The house is worth around £800,000 at face-value but it has not been very well maintained. I had an estate agent round about ten years ago who declined to give a value based on the state of the kitchen and bathroom and they are still in the same condition.

    Logically, it doesn't look like something that anyone is likely to lend money on but I'm not an investor. Could Equity Release be my answer? Also, what sort of sum should I be looking for in the current financial climate? I've looked at an online calculator and that says up to around £300,00 could be available but I'm inclined to just look for enough for survival in the short term, say, £25,000.

    We have three adult children and an inheritance would be nice but they all understand my predicament and would support whatever I do. However, I would be loath to actually lose any rights to the property during my lifetime and I understand that Equity Release or a Lifetime Mortgage would not affect that.

    NB According to the DWP only separated BUT NOT ESTRANGED spouses can have their property ownership disregarded for Pension/Savings Credit purposes. Perverse or what?


  • Savvy_SueSavvy_Sue Forumite
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    I am no expert, and I am not entirely sure, but perhaps the answer is to crack on with divorce, which you can do without a solicitor, and force a sale as part of that process? Wikivorce would be a good place to start. 
    Still knitting!
    Completed: TWO adult cardigans, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees, 2 sets of handwarmers, 1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 3 balaclavas, multiple hats and poppies, 3 peony flowers, 4 butterflies ...
    Current projects: pink balaclava (for myself), seaman's hat, about to start another cardigan!
  • edited 21 January at 5:34PM
    missilemissile Forumite
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    edited 21 January at 5:34PM
    Yes, get a divorce asap then you can force a sale of the property. I appreciate you are short of funds. You might be able to raise a loan using your share of equity in the property. You might find an understanding solicitor who will defer his fee until the divorce is finalised and house is sold.

    I do not understand why EA refused to value the property, but no matter you can send it to auction where anything will sell if the price is right.

    With your share of the property you could be enjoying your life not scraping by on benefits in a 1 bed council property.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
  • Nick_LovellNick_Lovell Forumite
    25 posts
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    mummifiedartist -With a divorce in hand, this is going to rule out any ER options. Both owners have to receive financial advice and agree to the first legal charge in any situation. The property condition also sounds like a valuer would not respond positively to the lender.  I think the previous advice of trying to get it sold and realise the value even via auction could be the solution. Sorry, probably not the response you want to hear, but ER is not the solution for you in this instance.
  • OLD_OZZYOLD_OZZY Forumite
    2 posts
    Fifth Anniversary First Post Combo Breaker
    MoneySaving Newbie
    Husband & I took out an EQR 20 years ago. Now wish to downsize from a freehold house to a cheaper leasehold flat in a block of 16 flats. Lease 107 years left with ground rent £150pa, reviewed every 21 years. First review due 2022. 
    EQRC solicitors insisting on Deed of Variation to cap ground rent to £250pa for next 60 years. Freeholders refusing as would have to change it for all the flats in the block.
    We are 82 & 75 so not likely to live for next 21 years. Stalemate. Deadlock. Even though we've already agreed to repay them the property value difference.

  • missilemissile Forumite
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    I guess that is a problem with ER. You need to abide by their rules.
    "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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