Equity Release

Duchess79

We are in our late 60s. We are cash poor but have ample equity in our house. We have no mortgage but are struggling to make ends meet until I get my full pension, so are starting to build some credit card debts. We’ve had it valued and it is worth around £450k. We have no children of our own but two stepchildren of my husband’s. They are both in their 40s and we talked to and they say ‘do as you like’.

We have done a thorough appraisal of our debt situation using a specialist debt consultant and then were recommended an Equity Release plan through L&G Flexible Lifetime Mortgage (we used StepChange).

We were very concerned about the implications of compound interest so the deal we have looked at is a small initial sum £10k with a £94k drawdown. This will give us an emergency fund and help us pay those credit cards off. In addition we can pay off up to 10% of the loan interest each year which we will try to do for as long as we can to limit the impact of the interest on eventual estate. The mortgage is transportable, we can sell and pay off with no penalties if one of us dies and looks very much what we want. We will both continue to work part-time for as long as we can so have some income as well as pensions.

However we are at the final stage and just having a last look round to see if we should move before we sign into the agreement. Moving would keep us free and in control, however we are very reluctant to move as this house and location are literally perfect for us.

Whilst we all know the bad press with Equity Release, this deal looks ideal in so many ways. I just want people’s opinions on this type of mortgage where you can pay off some of the mortgage interest as you go to limit the impact on the estate is a good plan or not.

bostonerimus

I assume you've considered downsizing to a less expensive home. Have you also done everything you can to cut spending and also considered part time jobs to get you through your current cash strapped period?

p00hsticks

bosterimus, the OP has answered most of your questions in their intial post

bostonerimus wrote: »

I assume you've considered downsizing to a less expensive home.

Duchess79 wrote: »

However we are ....just having a last look round to see if we should move before we sign into the agreement. Moving would keep us free and in control, however we are very reluctant to move as this house and location are literally perfect for us.

and

bostonerimus wrote: »

Have you also .... considered part time jobs to get you through your current cash strapped period?

Duchess79 wrote: »

We will both continue to work part-time for as long as we can so have some income as well as pensions.

Duchess79

Yes...and thank you. We are both working part time. I went through a phase of applying for full time work again...but I’m afraid it’s a dead dog at my age! Would do it if the opportunity came up even tho I don’t want to. We haven’t discounted moving though. We are still considering. However it’s took us 30 years to find a house that suited us so well and whilst I know we would make the best of anywhere we lived, your home is 24/7/365 ....we have economised and lead modest lives but enjoy living where we do so if there’s a way to stay that is safe we’d like to. Really just want to see what people’s views are on this beer type of equity release where we can pay of some interest as we go?

LHW99

There are now retirement mortgages
https://www.hodgelifetime.co.uk/retirementmortgage/what_is_a_retirement_mortgage.html
discusses, but there are other providers.


Is it worth considering this, eg by contacting a mortgage broker, to get another view before proceeding if you have doubts?

ggmf

Duchess79 wrote: »

We are in our late 60s.

- How late?

Duchess79 wrote: »

struggling to make ends meet until I get my full pension

- Due when?

When your full pension is payable will this be sufficient to meet your needs? Have you done a budget forecast?

Paul_Herring

In addition we can pay off up to 10% of the loan interest each year

Is that correct? I thought such limits were on repaying the underlying capital borrowed, not the interest generated as a result of that borrowing...

Duchess79

We have done our forecasts and will be able to make ends meet. Full pensions due in 31 months, so this is short term cash flow issue

Duchess79

Is that correct? I thought such limits were on repaying the underlying capital borrowed, not the interest generated as a result of that borrowing...

I will check wording but not sure why you raise this? Is there a difference?

Spreadsheetman

I would definitely look at the cost of maintaining your existing house and how well it would work if one or both of you became disabled or couldn't drive.


My wife and I have discussed our future property plans and we will be moving to a low-maintenance flat or small bungalow within a short walk to all the facilities we need in our mid-70s. We have seen both our parents struggle with property unsuited for the elderly, but they are so emotionally invested in it that moving becomes almost impossible.

MallyGirl

yes - this.

I was so relieved when my in-laws - prompted by a fall downstairs by FIL - moved from their big, drafty Victorian property to a more modern bungalow. MIL couldn't even change a light bulb in the old house due to the high ceilings, let alone deal with the various issues that crop up with old houses. We had feared a 'we have lived here for years and will manage' stance but they embraced the change. We live 250 miles away so this was a good thing.
The bills are much smaller too