Equity Release guide discussion

Keep_pedalling

ronnieD43 said:

We are in our 70s and would like ER. On making enquiries and answering question, we have a Family Asset Protection Trust taken out 7yrs ago and have been told we cannot do ER. We own the house outright. Bought for £8000 now valued at £225000. Is there anything we can do to get around this please. We don't want to move as we've been here for 47yrs and its home.

I am afraid it sounds like you were taken in by one of those terrible companies who like to create fear about care cost then take a large fee to create a trust that won’t actually stop that happening.

If that actually the case you don’t own the house the trust do, and you will need to take advice to see if you can undo the trust, but that could be expensive.

Who (mis) sold you the trust and do you know who the trustees are?

greggzie

I have read through all the available pages about equity release and understand the pros and cons a lot better now thanks to the advisors replies on the forum.

I am 69, no mortgage, house worth approx £250k, no dependents. I would like to release some equity (maybe only 30k to 40k ) for home improvements, debt payments, family help and maybe some personal extravagance whilst I can enjoy these before popping my clogs.

Having contemplated this for years I have lately been searching for advice, quotes etc. and find things a little complicated. Advisors,lenders,providers, IFA's, fees, commissions, and so on.
I have filled out these calculator forms online and been bombarded with phone calls and emails from different companies wanting to arrange consultations either by phone or home visits.....am I going down the correct road here or is there a more simplified way to approach. How do you choose a company initially ? by fees, rates, t's&c's, overall costs, or what.

I realise everyone's situation will be different but I am leaning towards a lifetime mortgage with a drawdown facility available rather than take an excessive amount at the start.

Nick_Lovell

greggzie - good to see you have done your homework. I would recommend you only use an adviser who is a member of the equity release council and makes no charges upfront, only on completion. Be careful of the larger firms, one has gone advice free, but they are only offering from their in house lender and limits their advice and could mean you are paying more than you need to, so just saving £1000+ in advice fees ends up costing thousands in the cost of borrowing. Experience goes a long way - a good adviser knows the market, the lender criteria and will get the right deal. Watch out for newbies - they all have to start somewhere I know, but experience counts for a lot. Taking the lump sum + drawdown is a good idea, but be aware that drawdowns are not guaranteed and can be withdrawn by the lender, in addition the rate you will pay on the drawdown is generally higher than the lump sum. A reputable adviser will present their advice and then leave you alone to consider, before returning with a recommendation and then going through that comprehensively to ensure you are fully aware of the product features, cost of borrowing etc. Smaller firms are often a better bet, as to the larger firms you are just another number. Also they do not have the wider remit of being able to consider your overall financial position and can only advise on equity release, however, it maybe that you need other financial advice to be considered.Hope that helps?

greggzie

Thank you for the informative reply which does indeed help. Could you just clarify some of the terminology used regarding EQ. The large companies that advertise on TV and online are they providers or advisers or brokers or are they the same thing ? also the people who actually provide the money are they the lenders or providers ?

The cautious approach to "free advice" at the cost of higher long term charges is appreciated and I will be wary of 'carrot dangling' with ref. to the terminology again what is an "In house lender" ? I'm assuming it means that company gives both the advice and the money.

Interestingly yesterday I received a return call from an adviser to update an enquiry I had made the previous day, he informed me that a couple of firms had got back to him with a refusal due to the fact that a neighbour has a commercial business at his property which is about 1/4 of a mile away from my property with 3 residential houses, a bank of trees and a drainage ditch between us. It seems odd that this had no bearing on the mortgage when I bought my house 35 years ago ! Just to clarify things I live in a rural area surrounded by fields on 3 sides with the ditch etc.on the 4th side, the only access being down a private drive of approx 400yds.

Without naming names this is apparently the biggest provider of equity release in the UK.
He also stated that the quickest companies to reply are often the ones to refuse an application and he was waiting for other companies to reply although they may be at an increased rate of interest. He will be in touch again once he has that information.

This has put me on the back foot a little bit and concerned about my own suitability for EQ, however, I have a home visit arranged for tomorrow from another provider so we'll see how that goes.

Nick_Lovell

@greggzie, The 2 largest brokers are Age and Key. They both have an in-house lender - albeit they actually source the funds from different different companies - they don't actually lend the money as such. Key's free advice is sourced from their own lender, limiting the range of advice. They are separate companies I should clarify but they are part of the group. So the adviser delivers the financial advice but the lender will be recommended by them. Some lenders have become very risk adverse and commercial property nearby can be an issue. I'm surprised you have a home visit - as we are still not able to do that due to Covid - but hoping that will be alleviated on the 19th - we are delivering advice by video call only. Hope it goes well. Happy to help.

greggzie

Quick reply ...thank you, that's cleared up the terminology for me and I now have a better understanding of how things work.

The phone advice as you rightly thought was from a Key adviser and the home visit is an adviser from Equity Release Scotland. I assume Covid precautions will be followed.

I will let you know how things progress. Thanks again.

missile

I will be interested to hear the numbers :-)

greggzie

Quick update, I have received an illustration for £40k initial with £40k available drawdown at 3.34% with arrangement & legal fees of around £1600. Nothing to compare it with as yet but it does appear to be competitive. 

Nick_Lovell

@greggzie looks about right - rate is determined by age of youngest borrower and the property value. I can compare it for you if you let me know those details.

greggzie

Hi Nick, I did send a message to your email address on 8/07/21. 

Only borrower aged 68 and the property value of 250K.

Thanks.