Equity Release guide discussion

Debtfreeatlast_2

Nick_Lovell said:

Debtfreeatlast_2 said:

Does anyone know how you can find the best rates, without going through to each broker? I had a call from one and it felt like a bait and switch.  The phone call mentioned a monthly repayment figure, but every subsequent quote is £15-20 more per month to keep the capital loan at the same amount.

Also, keeps pushing to take a higher rate today with a lower redemption cost with the view to redo it in one or two years' time for lower interest, strike me the fees involved would make it would take a long time to see any benefit, apart from to the company doing it.

Any knowledge would be helpful!

@Debtfreeatlast_2 The best rate is determined by the age of the youngest borrower and the value of the property, and how much you want to borrow. The role of the adviser is to provide you the lowest cost of borrowing based on your circumstances. No-one should be recommending a rebroke for at least 6 years, or with one product 4 years to minimise the early repayment charges.Rates are currently from late 6% upwards. Happy to help if you need more info.

Hi Nick, thanks for the reply, to be fair then I have been offered 6.31% pretty sure on the initial phone call it was 6.1.

I am looking at monthly repayments like an interest only mortgage.  What sort of interest rate would it have been before Covid, Ukraine etc when base was really low, just gauge the mileage in redoing it if interest rates went lower.

Looking at a facility of 11.5% of the house value, both 59

Nick_Lovell

Debtfreeatlast_2 said:

Nick_Lovell said:

Debtfreeatlast_2 said:

Does anyone know how you can find the best rates, without going through to each broker? I had a call from one and it felt like a bait and switch.  The phone call mentioned a monthly repayment figure, but every subsequent quote is £15-20 more per month to keep the capital loan at the same amount.

Also, keeps pushing to take a higher rate today with a lower redemption cost with the view to redo it in one or two years' time for lower interest, strike me the fees involved would make it would take a long time to see any benefit, apart from to the company doing it.

Any knowledge would be helpful!

@Debtfreeatlast_2 The best rate is determined by the age of the youngest borrower and the value of the property, and how much you want to borrow. The role of the adviser is to provide you the lowest cost of borrowing based on your circumstances. No-one should be recommending a rebroke for at least 6 years, or with one product 4 years to minimise the early repayment charges.Rates are currently from late 6% upwards. Happy to help if you need more info.

Hi Nick, thanks for the reply, to be fair then I have been offered 6.31% pretty sure on the initial phone call it was 6.1.

I am looking at monthly repayments like an interest only mortgage.  What sort of interest rate would it have been before Covid, Ukraine etc when base was really low, just gauge the mileage in redoing it if interest rates went lower.

Looking at a facility of 11.5% of the house value, both 59

The rates going back 3+ years would have sat around 3.5% upwards, they are geared off the 15 year Gilt rate, not the BOE rate, but of course Gilts have gone up in line with interest rates. £30k as an example would be at around 6.43% upwards now, or a few bps higher. About £163 a month to service the interest. However, if you have income to support then a retirement interest only mortgage may be an option and could be around 6.15%. Not much in it though, but early repayment charges would be better on a RIO.

Trifolium

Am looking at planning ahead and am a bit unclear as to whether you can do equity release in what would be our scenario in say five years should we need to do so. My brother ( currently 55 and has a mortgage) and I ( currently 57, retired and no mortgage) own our homes but also jointly own a house that our parents live in rent free ( no mortgage on it).  Do companies let you do equity release on a property you own but don't live in and don't rent out?

Savvy_Sue

Trifolium said:

Am looking at planning ahead and am a bit unclear as to whether you can do equity release in what would be our scenario in say five years should we need to do so. My brother ( currently 55 and has a mortgage) and I ( currently 57, retired and no mortgage) own our homes but also jointly own a house that our parents live in rent free ( no mortgage on it).  Do companies let you do equity release on a property you own but don't live in and don't rent out?

I don't know, but I would recommend you / your brother / your parents getting some proper estate planning advice now, as well as financial advice, because you may be lined up for a bit of a shock with potential inheritance tax and capital gains tax liabilities down the line. Hopefully you all have wills which cover what happens if either you or your brother dies before both your parents die, and hopefully your parents weren't advised to give away their house to avoid IHT and care home fees (should they be necessary). 

Nick_Lovell

Trifolium said:

Am looking at planning ahead and am a bit unclear as to whether you can do equity release in what would be our scenario in say five years should we need to do so. My brother ( currently 55 and has a mortgage) and I ( currently 57, retired and no mortgage) own our homes but also jointly own a house that our parents live in rent free ( no mortgage on it).  Do companies let you do equity release on a property you own but don't live in and don't rent out?

Hi @Trifolium - you can only release equity on a property that is your main residence for equity release purposes. You can capital raise with a remortgage of the property of course, and can be a 2nd home, but you would need income to support the borrowing in this case. Be careful if the property was gifted to you by your parents for inheritance tax purposes.

snowball3

My mum is terminally ill and has recently needed a live in carer. While she has the money at the moment to pay for it i am looking at options as what to do when the money runs our. She owns her own home, value approx £500k. Any advice would be appreciated.

Nick_Lovell

snowball3 said:

My mum is terminally ill and has recently needed a live in carer. While she has the money at the moment to pay for it i am looking at options as what to do when the money runs our. She owns her own home, value approx £500k. Any advice would be appreciated.

This is a tough one. And so sorry to hear, have to ask but does your mother have mental capacity? If she does you can pursue equity release for immediate healthcare needs. However, if she has lost capacity then you would need a Lasting Power of Attorney in place to act on her behalf. Potentially up to 40-55% of the house value can be released depending on age. She would be deemed a vulnerable client and care would need to be exercised in the advice process.

snowball3

Nick_Lovell said:

snowball3 said:

My mum is terminally ill and has recently needed a live in carer. While she has the money at the moment to pay for it i am looking at options as what to do when the money runs our. She owns her own home, value approx £500k. Any advice would be appreciated.

This is a tough one. And so sorry to hear, have to ask but does your mother have mental capacity? If she does you can pursue equity release for immediate healthcare needs. However, if she has lost capacity then you would need a Lasting Power of Attorney in place to act on her behalf. Potentially up to 40-55% of the house value can be released depending on age. She would be deemed a vulnerable client and care would need to be exercised in the advice process.

I have a power of attorney for her for finance and health. She doesn’t have mental capacity to make decisions. 
Are there any other ways of releasing money like an interest only mortgage?

Nick_Lovell

snowball3 said:

Nick_Lovell said:

snowball3 said:

My mum is terminally ill and has recently needed a live in carer. While she has the money at the moment to pay for it i am looking at options as what to do when the money runs our. She owns her own home, value approx £500k. Any advice would be appreciated.

This is a tough one. And so sorry to hear, have to ask but does your mother have mental capacity? If she does you can pursue equity release for immediate healthcare needs. However, if she has lost capacity then you would need a Lasting Power of Attorney in place to act on her behalf. Potentially up to 40-55% of the house value can be released depending on age. She would be deemed a vulnerable client and care would need to be exercised in the advice process.

I have a power of attorney for her for finance and health. She doesn’t have mental capacity to make decisions. 
Are there any other ways of releasing money like an interest only mortgage?

There would not be any other routes for releasing funds from the property as affordability criteria would come into play. The lifetime mortgage is legally a first legal charge mortgage and does not differ from a RIO in a legal charge format - the interest can still be serviced on a lifetime mortgage as well. The benefit is that there is no affordability criteria. With the LPA you are able to proceed on her behalf. 

snowball3

Nick_Lovell said:

snowball3 said:

Nick_Lovell said:

snowball3 said:

My mum is terminally ill and has recently needed a live in carer. While she has the money at the moment to pay for it i am looking at options as what to do when the money runs our. She owns her own home, value approx £500k. Any advice would be appreciated.

This is a tough one. And so sorry to hear, have to ask but does your mother have mental capacity? If she does you can pursue equity release for immediate healthcare needs. However, if she has lost capacity then you would need a Lasting Power of Attorney in place to act on her behalf. Potentially up to 40-55% of the house value can be released depending on age. She would be deemed a vulnerable client and care would need to be exercised in the advice process.

I have a power of attorney for her for finance and health. She doesn’t have mental capacity to make decisions. 
Are there any other ways of releasing money like an interest only mortgage?

There would not be any other routes for releasing funds from the property as affordability criteria would come into play. The lifetime mortgage is legally a first legal charge mortgage and does not differ from a RIO in a legal charge format - the interest can still be serviced on a lifetime mortgage as well. The benefit is that there is no affordability criteria. With the LPA you are able to proceed on her behalf. 

Thanks. I was trying to find a cheaper option than equity release where there is compound interest. I will get some advice when we are closer to the money running out