Equity release

sevenhills

I dont think its something that I am interested in, but a large proportion of my wealth is and will be in my home.

I can see myself using my home to generate money and company, by getting another lodger, not selling the house. But I do get letters regularily from 'Age Partnership'. They may know my circumstances. Perhaps equity release is the right thing for some people?

dunstonh

Equity release is generally positioned as an option of last resort.   So, it will be the right thing for some people. Just not the right thing for most people.

Silvertabby

Depends on circumstances.  £330K mortgage free house, no children to leave it to.  No wish to downsize, as we love the house and the area.  Haven't ruled out some form of equity release in our 70s, to pay for a cleaner, gardener and other luxuries.

Linton

I have half our home on an IO lifetime mortgage.  My intention is to move to roll-up as soon as it is viable and am very happy for the whole house to be taken by the bank when we have no need of it. This could make life easier for our executors.

Like Silvertabby we have no children and our friends/relations are about the same age as us, so unlikely to get much benefit from a small fortune when we go.  It seems a waste for all the equity in a house to sit there unused and unusable when it earns significantly more than the interest on the mortgage in our investment accounts.  In due course we will be able to make gifts and donations during our lifetimes rather than waiting until after death.

Borrowing can be a useful tool if you dont actually need to borrow to pay the bills but a major risk if you do.

Malthusian

If you do resort to equity release, ring a reputable IFA, rather than some random spammer.

The main risk of equity release that has not been mentioned is that one day you do decide you want to downsize to somewhere more suitable for your needs, or need to move to a care home, but your money has been eaten up by the equity release loan. It's easy for a 70 year old to say they'll only move out of their home in a box, less easy for the same person as a 90 year old who can't manage the stairs.

westv

If we ever do go for equity release we would definitely go for one where we pay the interest back each month. 

Linton

Malthusian said:

If you do resort to equity release, ring a reputable IFA, rather than some random spammer.

The main risk of equity release that has not been mentioned is that one day you do decide you want to downsize to somewhere more suitable for your needs, or need to move to a care home, but your money has been eaten up by the equity release loan. It's easy for a 70 year old to say they'll only move out of their home in a box, less easy for the same person as a 90 year old who can't manage the stairs.

Yes, definitely go through an IFA if you want equity release.  They will check your sums and their knowledge of the market and access to all providers should get you a deal that you could not by going directly.

Your money wont be eaten up if you go I/O.  The debt will stay the same.  The possibility of trading down or going into a care home should be part of your pre-planning.  It certainly should not come as a surprise when it is too late to do anything about it.

Dandytf

westv said:

If we ever do go for equity release we would definitely go for one where we pay the interest back each month. 

Though no where near Equity Release age group, I recently visited Natwide 'Later in Life' aka  equity release products.
Very disappointing that their 'no negative equity guarantee' option, isn't included in the 'Capital and Interest' paying choice.

Malthusian

Dandytf said:

westv said:

If we ever do go for equity release we would definitely go for one where we pay the interest back each month. 

Though no where near Equity Release age group, I recently visited Natwide 'Later in Life' aka  equity release products.
Very disappointing that their 'no negative equity guarantee' option, isn't included in the 'Capital and Interest' paying choice.

Is that a retirement mortgage with a fixed end date rather than a whole-of-life term, which is what most people think of by "equity release"?

A no negative equity guarantee is required to comply with Equity Release Council standards and I'd be very surprised to see an equity release (whole of life loan) product without one.

For non-equity-release loans, a no negative equity guarantee isn't common in the UK (though it is in the US, where such loans are called "no recourse").

[Deleted User]

Its a very expensive way to borrow.

Far more efficient to sell the house and rent or to buy a cheaper property. 

westv

Deleted_User said:

Its a very expensive way to borrow.

Far more efficient to sell the house and rent or to buy a cheaper property. 

Is it? Even when you end  up paying quite a few hundred pounds a month in rent?