Equity release

Star81

Hello, I'm not sure if this is the right board so please forgive me if not! My friend is looking into Equity release. She and her husband fully own their home. They are in their late fifties. They woukd like to know more about what equity release is and which companies are considered good. Many thanks

ACG

Equity release I am pretty sure needs to be done via a broker who is qualified (I do not hold the ER qualification).

The broker will recommend a lender, but most are insurance/pension funds and all are reputable (people like Legal and general for example).

There are quite a few options when it comes to ER so it is probably worth looking for a broker. If neither of you know any, maybe take a look on google?

AnotherJoe

I would say they are far too young to be looking at ER, any deal they got would be very poor.
They would almost certainly do better to downsize / move to a cheaper area, and release equity that way. It will also probably tie their hands in terms of future moves as well.

Star81

Thank you both for your answers. When you say their hands would be tied in terms of moving in the future, what does this mean please? My friends were looking into the possibility of taking out ER and then buying a smaller property and renting out their original house. Is this a feasible idea? Do you sign over the deeds to a house when you take out ER? Many thanks

ACG

If you do equity release in the true sense, you live in that property until you sell it/die/go in to care.

If you mean a remortgage and pulling money out to use to purchase another property, that is fine but that is not really known as equity release.

Star81

What happens to the house should they take out ER and then go into a care home in the future? Is the house still legally theirs after taking out ER or will the ER company own the house? Sorry for so many questions!

AnotherJoe

It depends what type of ER. But to reiterate, any scheme that is an ER one is likely to be poor value due to their ages. If they really think that becoming a landlord is a good idea then aside the fact they likely haven't looked into the maths, they would be better off to get a let to buy mortgage which will be at lower rates than ER schemes and won't impose conditions on house sales because yes some ER schemes do.