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Equity Release guide discussion

edited 30 November -1 at 1:00AM in Over 50s Money Saving
147 replies 60.6K views
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  • Keep_pedallingKeep_pedalling Forumite
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    bevjtaylor wrote: »
    im heartbroken I have just found out my parents had equity release on their house around 18 yrs ago borrowed 60K on checking a lastest statement now owe 118K dont know what to do? anyone got advice?

    Your parents obviously needed the money, and they will not have to pay it back it will simple reduce the value of their estate. I hope you are not saying you are heartbroken simply because it reduces any inheritance you thought you were getting.

    Although it is usually an option of last choice, for many people who are property rich and cash poor ER gives them an option to live more comfortably. I have seen far too many people sitting on a fortune, but live in squalor because everything is tied up in their home. When they die their children sell up and live the life of Riley on the proceeds.
  • badmemorybadmemory Forumite
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    Are you trying to say that they owe £118k & the house isn't worth that? I believe that was possible with some agreements. If you could have given them the money at the time (or even loaned it) then I can understand being heartbroken as to see those interest rates charged when you may well have only had to pay a third of that would be sickening.
  • BfdBfd Forumite
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    My mum took out an equity release and although there is a no negative equity clause, it looks like we will have no value to inherit on the house as the interest is so high and the debt escalating. She can't afford to repay any of it so we have to just wave goodbye to the family home when she passes which is such a shame. Is there any way to reduce the interest rate??
  • Keep_pedallingKeep_pedalling Forumite
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    Bfd wrote: »
    My mum took out an equity release and although there is a no negative equity clause, it looks like we will have no value to inherit on the house as the interest is so high and the debt escalating. She can't afford to repay any of it so we have to just wave goodbye to the family home when she passes which is such a shame. Is there any way to reduce the interest rate??

    The only way out of a lifetime mortgage is to pay it off, and the interest rate will be fixed, unless the total dept reaches the actual value of the property when it effectively becomes zero.
  • I live in a Park Home. If I sold it I wouldn't have enough money to buy anything more manageable or if I rent somewhere my money wouldn't last long. Is there anywhere at all that would give me equity on my park home please?
  • Keep_pedallingKeep_pedalling Forumite
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    rosmic wrote: »
    I live in a Park Home. If I sold it I wouldn't have enough money to buy anything more manageable or if I rent somewhere my money wouldn't last long. Is there anywhere at all that would give me equity on my park home please?

    I doubt it, park homes tend to depreciate in value, and ER companies prefer to lend against something that is likely to increase in value and not leave them with a shortfall if the borrower turns out to be long lived.
  • biglugsbiglugs Forumite
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    echos_mum wrote: »
    What happens if, after some years from taking Equity Release, you need to move for any reason, eg down-sizing, disability issues, or just to be nearer relatives. Do the repayment terms come into play? Or can you transfer the plan to the new property somehow? Otherwise you could end up with insufficient equity to buy anywhere.......
    Some providers will let you port the loan over to the new property, provided it is of a type that they will lend on, and that the equity in the new property still meets their maximum amount. If it is in excess of that they will charge a part-redemption fee.

    If they won't accept the new property type they will charge the entire redemption fee.
    You don't get medals for sitting in the trenches.
  • biglugsbiglugs Forumite
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    bevjtaylor wrote: »
    im heartbroken I have just found out my parents had equity release on their house around 18 yrs ago borrowed 60K on checking a lastest statement now owe 118K dont know what to do? anyone got advice?

    In 18 years your parents debt has almost doubled. At the same time house prices have increased by roughly 175% (from Nationwide House Price Index).

    So if their house was worth £200k (say) when they took out this loan they still have equity of £432k. Not a bad deal IMO.
    You don't get medals for sitting in the trenches.
  • missilemissile Forumite
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    Borrow £60,000 after 18 years the accumulated debt is £118,000. That would approximate to circa 3.8% interest. That is a very good deal, IMHO.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
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  • BrowntoaBrowntoa Forumite, Board Guide
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    The downside to equity release/lifetime mortgage

    Unless you make interest or capital repayment the debt rolls up year on year
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