Equity Release - vendors want more than house is worth to pay it off

DairyQueen

theartfullodger said:

Yet again, another example of why "equity release" schemes/scams are in reality just overpriced mortgages at usorious rates run by blood-suckingly evil persons.

Avoid at all costs.  

These crooks should be fined and deported.

Modern lifetime mortgages/ER are a godsend to many homeowners.  What would you suggest as a reasonable alternative to those who are cash-poor but can't downsize and/or don't want to become tenants in their dotage?

Retirement poverty to protect the next generation's inheritance doesn't appeal to everyone. Some would rather enjoy the fruits of a lifetime's work without the need to sell a home they love. Others have no obvious heirs so welcome the opportunity to access the equity in their home.

The person in the graveyard is beyond caring about the rolled-up interest. Most of the ER-bashers are those who have been sorely disappointed to discover that 'their inheritance' has been spent by the people that earned it.

Interest rates are far from onerous when you consider that the lender is speculating on future rates, and the duration of the loan, and there is zero return on their investment for perhaps decades.

MalMonroe

Don't despair. It's only been on the market 10 days. Anything could happen. I agree with others who have said leave your offer on the table, it's a good offer. The fact that the vendors need £10k more isn't your problem. Another buyer may come along who is prepared to pay over the odds for a property that's worth less but they'd have to be a bit daft. 

I know what it's like to fall in love with a property. My husband and I did the very same thing years ago when our daughter was small. It seemed as if it had our names all over it and we went round and measured up for curtains and planned our colour schemes and I was even wondering where we could put our Christmas tree. (I know! that was in the August). 

We were living with my parents as we'd arrived back in the UK after living overseas. Anyway, next thing comes a very apologetic letter from the (single lady) vendor. She was very sorry but had decided not to sell her house after all. We were absolutely devastated. 

But you know what? We found another property. Not as nice but we liked it and made it our home. When you think about it, it's only bricks and mortar. People make it into a home. And there are plenty of other houses out there. You'll find one that's just right for you.

In the meantime, leave your offer as it is and see what happens. Don't panic. The vendors may well come to realise that they're not going to get what they want and withdraw the property anyway. It isn't the end of the world, I've been there and survived. If they eventually decide to sell at a lower price, then you are in a very strong position. Good luck! But there really are many more lovely properties out there . . . 

SameOldRoundabout

Is this the same house with the really dodgy extension from the In My Home section? If so, I’d run away as fast as you can. Paying over the odds for something that looks like Fred may have extended it during his weekends? Not something I’d like personally. 

purplebutterfly

Sameoldroundabout - yep! Same one.  
Actually writing it all down (and listening to other peoples' opinions)  has made me reassess things quite a bit.  

MEM62

purplebutterfly said:

The house is worth around £120,000 (£123,000 at most) but the vendors say that they owe £128,000 to the equity company and won't accept less than that.   

We are in love with the house and it is the first one that has been right for us in 8 months of looking but we won't give them more than it is worth.  

You are not that much in love with it if you are prepared to walk away for the sake of something in the region of £5 to £8K.  

peterhjohnson

I think there's something "fishy" here.
ER loans are typically under 50% LTV making getting into negative equity almost impossible. Unless this is a very old ER plan with very high interest rates and no "negative equity guarantee" the vendor may be confused or even "economical with the truth".
Politely offer what the property is worth to you  

purplebutterfly

MEM62 said:

purplebutterfly said:

The house is worth around £120,000 (£123,000 at most) but the vendors say that they owe £128,000 to the equity company and won't accept less than that.   

We are in love with the house and it is the first one that has been right for us in 8 months of looking but we won't give them more than it is worth.  

You are not that much in love with it if you are prepared to walk away for the sake of something in the region of £5 to £8K.  

With all due respect,  we don't HAVE an extra £5K when taking into account work that would need doing immediately inside the home.    For some people £5K is a LOT of money

AdrianC

purplebutterfly said:

MEM62 said:

purplebutterfly said:

The house is worth around £120,000 (£123,000 at most) but the vendors say that they owe £128,000 to the equity company and won't accept less than that.   

We are in love with the house and it is the first one that has been right for us in 8 months of looking but we won't give them more than it is worth.  

You are not that much in love with it if you are prepared to walk away for the sake of something in the region of £5 to £8K.  

With all due respect,  we don't HAVE an extra £5K when taking into account work that would need doing immediately inside the home.    For some people £5K is a LOT of money

"Can't afford an extra £5k" and "Can't afford an extra £5k when taking into account work required" are different things.
They're the difference between liking a property and loving it.
If you really loved it, you'd find a way to cover that difference, even if it meant delaying the work a bit.

Ultimately, there really is no easy answer here. It's a game of poker between you and the vendor.
Perhaps the vendors will see sense and come down to what you think the property is worth, your offer will be accepted, and everything will come up roses.
Perhaps they won't, and it'll sit on the market for years to come, gently deteriorating.
Perhaps somebody else will think that the extra £5k is worthwhile, given that they haven't seen anything else they like either.

The question you need to ask yourself is... if you end up not buying it, at what point will you start to think that finding the £5k would actually have been worthwhile? Only you can answer that.
If the answer is that you won't, even if you spend another eight months or more looking fruitlessly, then leave your £123k offer on the table, walk away, and wait for them to phone you.
If the answer is that you will, then you can start to see if there's a way to close the gap between £123k and £128k, and - if necessary - bite your lip and offer £128k.

In five years time, that £5k will be trivial.

FreeBear

purplebutterfly said:

Sameoldroundabout - yep! Same one.  
Actually writing it all down (and listening to other peoples' opinions)  has made me reassess things quite a bit.  

Let me throw another one at you... The neighbour's boiler flue is not that far from "your" bedroom window. On a cold day, guess where all the fumes & steam is going to go.... Coupled with the !!!!!! extension and cracks around the window, would you really be happy there ?

House in question - https://forums.moneysavingexpert.com/discussion/6236449/how-big-of-an-external-wall-crack-is-a-bad-crack/p1

purplebutterfly

I'd be desperately unhappy knowing I had paid over the odds for a house  - even if I had the extra £5K, which I don't.