equity release

producer

I hope this is the right place to put this discussion:


I live in a house with my partner of 27 years - we jointly own the property which is fully paid for. I am 69 & she is 52. The 4 bed house is valued at about £190K. We want to drawn down some equity from its value. Around £25K.


1. Should we get married to make this process smoother?
2. Should we consider paying the interest off as we are both still working?
3. What happens if we decide at a later date to sell / downsize?
4. How long will the process take?



I'd like to know more before I go and see an equity advisor.


Any comments / advise most welcome

Browntoa

Why equity release in particular ?

It's not a cheap way to borrow money , possibly 5% or higher against mortgage rates around 2.75 %

If you do go down that route definitely pay the interest to stop the debt snowballing and wiping out a large chunk of your equity

Linton

producer wrote: »

I hope this is the right place to put this discussion:


I live in a house with my partner of 27 years - we jointly own the property which is fully paid for. I am 69 & she is 52. The 4 bed house is valued at about £190K. We want to drawn down some equity from its value. Around £25K.


1. Should we get married to make this process smoother?

Dont know about being married. However your partner's age could be a serious obstacle. The company we used had a minimum of 55 but practically and usually the younger partner needs to be in their 60's and even then a borrower may be limited to about 25% of the equity to avoid the roll-up of loan interest exceeding the value of the house. The problem is that the company may not get their money back until the younger partner dies which in your case could easily be in 40 years time. The possibly quite low % of the equity that could be loaned may not be a problem in your case but it gives you a picture of some of the issues with ER.

2. Should we consider paying the interest off as we are both still working?

ER rates where the interest is rolled up could be 7% which can quickly compound. I/O rates may be 4% or less. We used a company which offered an initial I/O mortgage which can be converted to full ER when the younger partner is 80. It can also be paid off at zero cost at any time after the first 5 years.

3. What happens if we decide at a later date to sell / downsize?

Either the debt is paid off or carried over to the new house. For ER the mortgage company will have conditions on the sort of house for which they will agree to carry over. It would have to be one that can readily be sold. Also if the new house was of lower value than the old they may want some repayment.

4. How long will the process take?

From my limited experience, a few weeks.

Going for ER is a major step. I feel it could be the wrong tool if you only need £25K. The overheads in fees and professional assistance for ER can be significant.

AlexMac

Can you still simply get second mortgages? If so, some lenders such as Nationwide lend til ages 75-85

G_M

You should also consider wills & probate planning.

Do you own as Joint Tenants or Tenants in Common?
What happens to the property in the event of your death?
Putting the property in her sole name might be a way forward - both for inheritane tax and since she could then get a sole mortgage.



But there are multiple other factors that might be relevant, hence my recomendation that you view wills, estate planning, raising finance, protecting yourself against care costs etc as a whole, not in isolation to each other......

tlc678910

Hi,
See a whole of market mortgage broker before you see an equity release advisor and see what they can do for you. The rates will be much better and you won’t gradually lose the equity in your house.
Tlc