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Equity Release guide discussion

edited 30 November -1 at 12:00AM in Over 50s Money Saving
177 replies 69.5K views
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  • badmemorybadmemory Forumite
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    Surely for such a small (well relatively) amount one of the new mortgages would be more appropriate than equity release.
  • BrowntoaBrowntoa Forumite, Board Guide
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    All the products and alternative options. Also weighs the pros and cons

    Which?: Equity release: can you get a wage from your home? – Which? News.
    https://www.which.co.uk/news/2019/04/equity-release-schemes-offer-homeowners-monthly-salary-in-retirement/
    Links in my signature currently broken
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's , Boost your income and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to [email protected] Any views are mine and not the official line of MoneySavingExpert.
  • avonstouravonstour Forumite
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    Not sure if it's worth it, any pointers appreciated. Parents took out equity release years ago of £40K. Dad died some years ago. Mum in her late 70's now has £100K on this as grown with c. 5.5% interest, yikes. Her place is probably worth £300K today. She wants to move somewhere smaller / easier to look after one day soon. In theory if she bought somewhere for £180-200K, could she could then clear most/all of this release loan after any settlement and moving fees. Or if she went somewhere that was a bit less and couldn't clear it all, can I take on any remaining debt via either a loan/short mortgage, let her live there but all in my name etc? Some of these over 55 places she's looked at say you can't move with this kind of loan hanging over.

    She could just stay put I know but she could well go on for another 20 years, her mother did, and I know all value would go as the loan grows. So overall, looking at a way of helping her move one day, but also protecting any potential inheritance, never expected anything but would rather any value stays for me and my kids rather than disappearing into some equity loan company. Any tips/advice? Cheers
  • edited 12 July 2019 at 12:32PM
    hj711hj711 Forumite
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    edited 12 July 2019 at 12:32PM
    Alotbsol wrote: »
    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.

    Thank you that has helped my conundrum. I need to release equity in order to keep my head above water. My children will still inherit something out of my house in years to come assuming property increases and as I keep thinking to myself about doing this, I am coming to the realisation that I need to live now not worry about what my kids are going to inherit in 20 years time or whenever I pop my clogs. It is an option I have that I can consider, if I had been renting for years paying dead money I would not have that option... I feel easier having read your post...I feel a lot less panicky than when I first started reading threads here. My children are both accepting of the fact that there may not be as much left in the pot at the end but both are of the opinion that my sense of well being and security is what matters now not what they will get out of it. They will in fact benefit along the way as I will be able to help out a bit more with their load. school fees for grandchildren, school trips etc... gosh I may even be able to have amother holiday. Not had one for 7 years last year and the plastic is paying for that still!
  • Sea_ShellSea_Shell Forumite
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    Good for you hj711. More people need to take a leaf out of your book and live their lives for themselves, rather than constantly worrying about leaving a substantial inheritance.
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow ":beer: JOB DONE!!
    This should now read "It's time to start digging up those Squirrelled Nuts"!!! :j:j:j
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  • TELLIT01TELLIT01 Forumite
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    My wife will retire in 3 years time and I will then be 71. We have no children, and it seems to make sense to release some of the equity in our property which is currently worth around £280k.
    We're happy for my wife's sister and her family to benefit from anything left when we finally pop our clogs, but certainly don't plan to go without in order for them to benefit.
    What alternatives to lifetime mortgages and similar could we consider, or is equity release a good option for us? There is no point in looking at downsizing as 2 bedroom bungalows are nearly as much as our 3 bed semi in our area.
  • hj711hj711 Forumite
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    avonstour wrote: »
    Not sure if it's worth it, any pointers appreciated. Parents took out equity release years ago of £40K. Dad died some years ago. Mum in her late 70's now has £100K on this as grown with c. 5.5% interest, yikes. Her place is probably worth £300K today. She wants to move somewhere smaller / easier to look after one day soon. In theory if she bought somewhere for £180-200K, could she could then clear most/all of this release loan after any settlement and moving fees. Or if she went somewhere that was a bit less and couldn't clear it all, can I take on any remaining debt via either a loan/short mortgage, let her live there but all in my name etc? Some of these over 55 places she's looked at say you can't move with this kind of loan hanging over.

    She could just stay put I know but she could well go on for another 20 years, her mother did, and I know all value would go as the loan grows. So overall, looking at a way of helping her move one day, but also protecting any potential inheritance, never expected anything but would rather any value stays for me and my kids rather than disappearing into some equity loan company. Any tips/advice? Cheers

    Hi ya

    Sorry just read this although it's a couple of months old... since then though I have had 2 meetings with 2 different ER financial advisers so feel a bit more further forward than I was 2 months ago. Your mum could possibly port the loan to another property.. as long as it is of a value that they feel they can benefit from.. otherwise they would ask that she pays some of the loan off out of her sale but it would mean that the downsize could be a nicer property than she may find if she does not do this. As you have already found they won't do this on retirement properties though so keep that in mind. I don't know where you live but there are some very nice flats around where I am for instance that I will probably downsize to at some point in my equity release future.

    Also if she decides to pay off the loan they can charge an early redemption fee which can be as much as 25%.. ouch! But if say she was found to move in with family because it was felt she could not live independently any longer, then they will not charge a fee as this constitutes care. If you have any other questions let me know.. I may be able to help.. I am more than likely going to do this.. if I don't I am going to run out of money to pay my bills in the next 4 months! Not like I have much choice.. been sitting on the fence of this dilemma for too long and it has crept up on me! Ugh

    Good luck
  • hj711hj711 Forumite
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    TELLIT01 wrote: »
    My wife will retire in 3 years time and I will then be 71. We have no children, and it seems to make sense to release some of the equity in our property which is currently worth around £280k.
    We're happy for my wife's sister and her family to benefit from anything left when we finally pop our clogs, but certainly don't plan to go without in order for them to benefit.
    What alternatives to lifetime mortgages and similar could we consider, or is equity release a good option for us? There is no point in looking at downsizing as 2 bedroom bungalows are nearly as much as our 3 bed semi in our area.

    Hi there.. I have children and grandchildren but still I am considering this equity release as I am faced with the same dilemma concerning cost of bungalows. If your property is suitable for this.. they will allow UP TO a third of your property's value by the way.. my house is worth about £330k but the amount one adviser offered is £87k .. that is not going to last me 20 years (assuming I live to mid 80's) but you can port it to downsize or upsize believe it or not.. that really surprised me.. so for instance if you wanted a bungalow that was about the same price as your house, you could move your plan across to let it run on the bungalow provided it fitted their criteria etc.

    As you have no immediate family to leave it to, what is the point in sitting on your 'wealth'.. My children who are in their 30's are both very keen for me to do this.. they know it will affect what they get but as they both said.. it is not their god given right to expect to benefit and why should I be deprived of holidays and special treats in order for them to inherit... it makes no sense to them .. and to me.. I had a holiday last year which I am still paying for on my credit card.. think of the interest I will be paying if I don't clear it off in time before the interest free period ends.. that was my first holiday for 7 years! So for me it could relieve a lot of stress..

    For those who do have family they want to leave money to, you can ring fence a certain amount.

    They cannot take more than your house is worth from you, they are heavily regulated companies now.. I don't know where you are but I can tell you a name of someone I met yesterday and whom I found to be excellent.. her own mother took one out after her husband died so that she could move to a more suitable property for herself.. she would not have recommended that to her own mother if she was at all worried about these plans.

    There are different types of plans available also so you will be able to find one that suits you best.. for me it is the Lifetime Mortgage type.. and you can pay some of it off as you go so that you are reducing the overall debt.. if you want to but not if you can't.. i won't be able to unless some rich old uncle comes out of the woodwork with an inheritance.. ;-) You only pay interest on what you take out.. so be sensible if you do want to leave some behind and if you don't spend it and enjoy your life.. we only have one chance at this life!
  • TELLIT01TELLIT01 Forumite
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    Hopefully we would be able to get by on our pensions, but who wants to 'get by' for the next umpteen years? Releasing equity would enable us to continue having decent holidays, replace the car as and when it's necessary, etc.
  • hj711hj711 Forumite
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    TELLIT01 wrote: »
    Hopefully we would be able to get by on our pensions, but who wants to 'get by' for the next umpteen years? Releasing equity would enable us to continue having decent holidays, replace the car as and when it's necessary, etc.

    I know and this is what is going on in my head space when I think of doing it.. I have sat on the fence for a fair while about this.. 3 friends have done it and are glad they did.. one had an extension on her home, the other just has more money to live on instead of counting the pennies every month and wondering how she was going to manage.. losing sleep etc..and the other did it to have more money for nice holidays and helping out her single parent daughter..

    If I do this too, I can have a holiday, change my car (11 years old now..) and help my family out or treat them to something now and again.

    I have been talking to various friends about it as I am the only decision maker and they were all worried to begin with but now they too are coming around to the idea.. what is the point in sitting on money.. it is only a mortgage in reality and if you do not pay your monthly fees on a mortgage you could be repossessed.. whereas with this you can't be.. so there is an element of it being a safer option in that sense. You can repay up to a certain amount every year or pay your interest if you want to... one of my friends has done that with her private pension, although not a huge amount, she uses it to pay her yearly interest on her loan. In my previous home I was paying a huge mortgage for 10 years and it was interest only.. the cost of that was phenomenal and then you still have to pay the loan amount off when your mortgage reaches maturity or if you sell.... people forget that. I think it is because ER has had such bad press in the past, but now it is so heavily regulated, it is much more solid a foundation to consider.
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