Equity Release guide discussion

Flapjackqueen

My husband took out a £20k equity loan on a house worth approx £130k.  After approx 15years he owed £38k to the company.  We wanted to pay it off....and so had to pay £5k extra to pay it off early.  I WOULD NOT RECOMMEND EQUITY RELEASE!!!  The loan companies are winning all the way.  They make out they are doing you a favour...SERIOUSLY they are making huge amounts of money out of people's ignorance.

Savvy_Sue

AJW62 said:

Hallo forumites, hope someone can offer advice.  My friend and I bought our home together many years ago, as we were both single at the time and neither could afford to buy separately - we are tenants in common, 50/50, and the mortgage is paid off.  I now want to move out and buy a home with my partner, but my friend can’t afford to buy me out (the property is in the London area and worth over £400k).   I want her to be able to stay in the property- if we sold, she wouldn’t be able to afford anywhere local on her own (we live in her home town where all her friends and family are based).  

Would equity release be a feasible way of getting my share of the property’s value?  We’re both around 60. Neither of us have any dependents, so inheritance isn’t an issue.  But would this method release 50% of the property’s value?  And should we take it out together, or would she be able to take it out herself (if I took the money, I’d obviously transfer my half of the property to her, but then I guess she’d have to pay stamp duty).  Can anybody think of any other options that might be available?  I appreciate your thoughts, thanks.

You also need to take a look at
this post
which appears as a new post, but I suspect it was meant to be a reply to you here. 

Nick_Lovell

Flapjackqueen said:

My husband took out a £20k equity loan on a house worth approx £130k.  After approx 15years he owed £38k to the company.  We wanted to pay it off....and so had to pay £5k extra to pay it off early.  I WOULD NOT RECOMMEND EQUITY RELEASE!!!  The loan companies are winning all the way.  They make out they are doing you a favour...SERIOUSLY they are making huge amounts of money out of people's ignorance.

Equity Release will always have pre-determined early repayment charges and is not suitable for short term lending. Generally most modern plans ERC's will be at an end after 15 years. So it must have been an older plan. To take out a plan you would receive a Key Facts Illustration and this has to be presented in full to the client and a whole section is dedicated to ERC's so there is no 'ignorance' involved. Any client taking out a lifetime mortgage will know exactly what the early repayment charges are. Plus a lot of lender's do provide a number of exemptions if certain conditions are met, mainly around a spouse passing away. Plus, they never levy these charges to the estate, once the sole surviving partner has passed away or entered long term care. With rates still achievable at sub 3%, providing lump sums and getting no repayments for perhaps 20 years plus, the lenders are being more than reasonable and providing much needed life line for many clients who would not otherwise be eligible for secured lending. Modern Lifetime Mortgages are an excellent product and whilst not right for everyone, they do provide an option to access property wealth. The lenders can simply go and invest in Government Gilts, but provide this funding for older homeowners and often a real lifeline for matured interest only mortgages, where banks are expecting their capital repayment or sell your house! In addition there is now a plan that will allow up to 40% capital repayment per year without penalty. It is all about getting the right financial advice.

scimitarjohn

HalifaxBob said:

As I understand it equity release rates are fixed, am I correct? I am a single guy with no existing mortgage and no dependents. I am therefore thinking I am a good case for an EM. However I am concerned as to when I might apply and hopefully be accepted. I can only believe interest rates will someday (soon?) escalate again so my question is this: can I get an EM now, at a fixed rate, but only draw down a minimal amount for now and so be paying interest only on that drawn down section leaving the balance for a rainy day? Make sense ? Bob

I assume you're looking at a drawdown lifetime mortgage like me, the initial sum you take will be at the arranged interest rate but subsequent drawdowns will incur the interest rate applicable at the time of drawdown which may be higher (likely) or lower (very unlikely) hope this helps

177272

Hi,

Can some please direct me to where i can find the current interest rates for Lifetime IO mortgages, when i search all i get are sites wanting my contcat details which i dont want to give until i have done my homework.

Would look at a lump sum or a draw down, wife and i both over 60, no mortgage on a house valued at circa 320 K, looking to extract 100k ish, kids can have the rest when the time comes.

Regards

Steve

Gerry56

177272 - Steve. I feel your pain re the contact details.
There is a way round it.
Set up a dummy email and mobile number then use that for sites such as these.

Lemon2

I’m not entirely sure if I’ve come to the right place, but I’m hoping someone might be able to offer me some advice.

My grandmother is 90 years old and has fallen behind with her bills and racked up some debts.  She has only just revealed this to me, and I am now helping her to get everything up to date.  Unfortunately, I’m not in a position to pay off what she owes.

Her savings:  none

Her debts:  Approximately £6,000

Her income: state pension and a small private pension. 

Going forward:  she now has carers that come in twice daily.  I expect at some point they might need to visit her more often.

Previous equity release:  I’ve recently found out (to my horror) that she released £90k from her property in 2011 (with Just) and the amount to repay is approx £176k.  We’ve not had the property valued but the index value is £436k.

I am wondering if releasing £10k-ish from her property might be a good idea (to pay off her debts, plus some extra in case she needs more care).

Considering how much her previous equity release has eaten up, my feeling is that releasing this extra amount at this point in her life will do no real harm.

But I feel underqualified when it comes to all of this.  I don’t know how best to advise her and, for various reasons, she will not let me discuss this with other family members.  Is releasing some more equity our best option to get her creditors off her back, and make sure she is comfortable going forward, or are there pitfalls I have not considered?  And are there other options I should look into?

With many thanks in advance,

Sophie

Nick_Lovell

@Lemon2 - Hello Sophie.


The best course of action is to tackle the creditors first, to agree a reduced repayment plan given her age and care needs. They should be sympathetic and agree a plan moving forward. I would talk to Citizens Advice and they can assist you with this route.
I would avoid if possible taking out further borrowing at this stage. Do you have Lasting Power of Attorney? You will need this to deal with financial matters of your grandmother's behalf. What is the state of her mental health, as this is very important to providing financial advice.

The primary concern must be her health care at this time.

As far as the borrowing is concerned , the first steps in this process are to obtain a redemption statement from Just, this is to establish what interest rate she is on and if there any early repayment charges.

Based on the data, then the options are to obtain a further advance from Just, this is certainly the easiest and most cost effective route. Given her age, a re-mortgage should be considered but may not be appropriate as this could cost the estate more in the short term. She would need further financial advice though even if taking a further advance. 

I would take those first steps, talk to the creditors and CA and I'm sure a plan can be put in place rather than accessing further equity. Message me if you need any further help.  Nick.

I’m not entirely sure if I’ve come to the right place, but I’m hoping someone might be able to offer me some advice.

My grandmother is 90 years old and has fallen behind with her bills and racked up some debts.  She has only just revealed this to me, and I am now helping her to get everything up to date.  Unfortunately, I’m not in a position to pay off what she owes.

Her savings:  none

Her debts:  Approximately £6,000

Her income: state pension and a small private pension. 

Going forward:  she now has carers that come in twice daily.  I expect at some point they might need to visit her more often.

Previous equity release:  I’ve recently found out (to my horror) that she released £90k from her property in 2011 (with Just) and the amount to repay is approx £176k.  We’ve not had the property valued but the index value is £436k.

I am wondering if releasing £10k-ish from her property might be a good idea (to pay off her debts, plus some extra in case she needs more care).

Considering how much her previous equity release has eaten up, my feeling is that releasing this extra amount at this point in her life will do no real harm.

But I feel underqualified when it comes to all of this.  I don’t know how best to advise her and, for various reasons, she will not let me discuss this with other family members.  Is releasing some more equity our best option to get her creditors off her back, and make sure she is comfortable going forward, or are there pitfalls I have not considered?  And are there other options I should look into?

With many thanks in advance,

Sophie

PennyForThem_2

Is she claiming all the benefits she is entitled to?  Do not assume she is.  

Might be worth checking Age Concern and/or Citizens Advice websites - if she is mobile and has capacity make an appointment for advice?

happyhacker

Lemon2 said:

....

I am wondering if releasing £10k-ish from her property might be a good idea (to pay off her debts, plus some extra in case she needs more care).

Considering how much her previous equity release has eaten up, my feeling is that releasing this extra amount at this point in her life will do no real harm.

But I feel underqualified when it comes to all of this.  I don’t know how best to advise her and, for various reasons, she will not let me discuss this with other family members.  Is releasing some more equity our best option to get her creditors off her back, and make sure she is comfortable going forward, or are there pitfalls I have not considered?  And are there other options I should look into?

With many thanks in advance,

Sophie

If you can get her to agree POA that will be better than applying for Deputy with the OPG, a long and complicated process. Best of luck.