Equity release or Homewise Home For Life Plan?

Steve_Furber

We are in our late 60s and looking to buy a property. Is equity release preferable to the Homewise Home For Life plan? We don't wish to leave all the profits to our heirs, but want to release funds for travel etc.
Thanks in advance!

bostonerimus

Steve_Furber wrote: »

We are in our late 60s and looking to buy a property. Is equity release preferable to the Homewise Home For Life plan? We don't wish to leave all the profits to our heirs, but want to release funds for travel etc.
Thanks in advance!

A quick google of the Homewise plan doe not fill me with excitement. From your post I gather you have a house and want to sell it and buy another. The best ting would be for you to sell your home and buy a less expensive one and release equity directly for you to spend.

jamesd

Homewise Home For Life sells you a least to live in the property until the second person has died or moved into care. The discount given appears to be far lower than the difference between freehold ownership and the lease duration. Potentially useful only if you need a property of higher value than equity release will allow and won't be able to afford interest. In effect you're paying decades of rent up front as a lump sum. A very niche market with only niche participants and no regulatory protection at all.

With equity release you have 100% ownership, notably of the property price appreciation, and freedom to modify the property.

Just starting to become available are retirement interest-only mortgages. One of these might be your best option if you can afford the interest and deposit. It's likely to be 2019 before there's a good selection. If you can handle the interest these look likely to be the best overall deal.

Alibert

"With equity release you have 100% ownership, notably of the property price appreciation,"

And also any loss is yours because , indeed, you haven't actually released any equity. You have just taken out s mortgage

jamesd

Taking out a mortgage on a property you own is inherently releasing equity. If property prices do fall you own that drop as well but it's fairly unlikely in most of the country between now and a decade or three from now.

Alibert

No. Selling 50% of your property to your kids is releasing equity .

an 'equity release' product is simply borrowing a wodge of money and not paying it back .

As you say yourself when you take out a mortgage the equity is still all yours to lose (or indeed to gain).

The scary thing about 'equity release ' products is compound interest, and how fast your debt therefore grows

jamesd

Selling to the kids is another way to release equity. It seems that your objection is really to the accepted terminology for getting money based on the equity in a property.

Equity release products with no interest payment option will see an increase in the debt but as a proportion of the total property value this may reduce, depends on how the interest rate compares to house price increases.