Equity Release guide discussion 26 June 2018 at 3:10PM edited 30 November -1 at 12:00AM in Over 50s Money Saving 188 replies 72.7K views

TELLIT01

I've just read this topic for the first time. One person says that anybody who doesn't make repayments on the loan is a mug, but that surely depends on personal circumstances.
We have a property currently worth close to £300k and no children. We have one niece and one nephew and they will be welcome to anything in our estate when we finally pop our clogs, but we certainly don't intend to leave ourselves financially stretched to achieve that end. I have no plans currently to go the equity release route, but may well do in a few years time although I will research all available options when the time comes. I am nobodies mug, I simply don't care how much equity is left in the property when we die.

thegreybeard

Is equity release available for buy-to-let flats?

Alotbsol

We took out equity release 10 years ago so that we could help our sons get onto the housing ladder rather than pay high rents - we were simply bringing forward the legacies they would inherit eventually. That first deal was expensive (6.6%). so last year we paid it off and moved to Nationwide (via Age Solutions) at 3.5%, and there were no extras except £700 legal fees - Nationwide paid Age Solutions and the surveyor who valued our house. Now our house is increasing in value faster than the Equity release, and we are well pleased.

Buggins

My sentiments exactly and I have already taken out ER which has helped me achieve a standard of living. My attitude is that you work all your life to pay for your house and now I need to recoup some of the money to live in it. It is only a modest semi btw.

biglugs

thegreybeard wrote: »

Is equity release available for buy-to-let flats?

There are some lenders who will consider rental properties for Equity Release, but this is a specialist area - particularly as the valuation of flats can be an issue. Your best bet is to speak with a qualified ER broker.

biglugs

Buggins wrote: »

My sentiments exactly and I have already taken out ER which has helped me achieve a standard of living. My attitude is that you work all your life to pay for your house and now I need to recoup some of the money to live in it. It is only a modest semi btw.

Not only that, but most of the equity in people's houses these days isn't the capital that they paid off the mortgage - it's the accrued house price rises which have been tremendous in the past 10-15 years. For certain groups of people this is free cash, and it makes perfect sense to release some of it for certain things.

ikennedy

Hi, I have just found out my father took out a lifetime mortgage of 90K, against a property value of 190K 5 years ago. He hasn't been making any payments into this, and currently owes 109K. The property has since increased in value to 210K. He is not in poor health and so we do not expect to inherit the property any time soon. Given the already significant increase in loan amount, I am concerned that he will end up in a position where he owes more than the property is worth. Given that he has no intentions to pay money into this loan, will we potentially end up owing the bank more money than the property is worth? I am concerned we will ultimately end up inheriting his debt.

missile

ikennedy wrote: »

… Given that he has no intentions to pay money into this loan, will we potentially end up owing the bank more money than the property is worth? I am concerned we will ultimately end up inheriting his debt.

Even if the he owes more than the value of the property, you cannot inherit his debt when he dies.

If you are in any doubt speak with the equity release provider.

Keep_pedalling

ikennedy wrote: »

Hi, I have just found out my father took out a lifetime mortgage of 90K, against a property value of 190K 5 years ago. He hasn't been making any payments into this, and currently owes 109K. The property has since increased in value to 210K. He is not in poor health and so we do not expect to inherit the property any time soon. Given the already significant increase in loan amount, I am concerned that he will end up in a position where he owes more than the property is worth. Given that he has no intentions to pay money into this loan, will we potentially end up owing the bank more money than the property is worth? I am concerned we will ultimately end up inheriting his debt.

In 5 years the remaining equity has remained static so it is unlikely the house will not be able to pay off the loan, and even if it did the most the ER are going to get back is 100% of the house value even if the estate contains other assets.

ER companies are pretty good at how much they will lend against a house to make sure they get their loan and interest back.

Darren_Amos

When you mortgage a normal purchase the lender knows that one day the mortgage will be paid off. So if the property has a clause on its deeds, or is of odd construction that's your problem if you can't sell it.
As an Equity Release Lifetime mortgage is only paid off when you die (or go into care) it is their problem if it doesn't sell, so they won't offer a mortgage just in case.