Equity Release

Silvertabby

What does she want this £30K for ?  If her only income is the State pension, and the money is to improve her standard of living, then I don't see the problem.

However, if she is only in her 50s and you know that she is not good with money, then I can see why you might be concerned.

Daniel54

My concern would be less about the principle of equity release, and more about who she is dealing with.Did she find them or was she cold called (always a red flag)

So ,as per Zylophone's link, she needs to be dealing with a regulated adviser ( preferably independent) authorised to advise on equity release.In your shoes  my starting point would be to assure myself on that front.

You seem sure that she does not need or want  the money from the equity release.Do you have a sufficiently clear view of her  financial circumstances to know with certainty whether that is the case ?

mottyt

Daniel54 said:

My concern would be less about the principle of equity release, and more about who she is dealing with.Did she find them or was she cold called (always a red flag)

So ,as per Zylophone's link, she needs to be dealing with a regulated adviser ( preferably independent) authorised to advise on equity release.In your shoes  my starting point would be to assure myself on that front.

You seem sure that she does not need or want  the money from the equity release.Do you have a sufficiently clear view of her  financial circumstances to know with certainty whether that is the case ?

Thanks  -- she only has income from her state and local government pension.

Yes she has shared her bills and we're looking to reduce those to free up some cash each month. 

I have no opinion on whether she needs the money, ultimately if she wants to enjoy it whilst she can access it then great.

She wants to do a few home improvements and fund being able to "get things in order" for her daughters.

She is only 67 so plenty of life left 🙂

As I said the main concern is whether there are hidden factors, did you see my scenario example a couple of messages ago? Is that accurate.

She has also basically be told that her house value might increase which would offset the interest, which makes sense at face value.

I neither agree or disagree with her approach I'm just doing some fact finding to help inform her decision.

mottyt

Company is called Retirement Solutions. Dare I say first result on Google..!

jamesd

Equity release these days can be a cheap way of borrowing, it's the compounding of 2 or 3 percent that eventually accumulates quite a lot of interest.

One thing she could do to help with the bills is use equity release to help fund deferring her state pension for a while, until it's risen enough so that her essential spending is covered by her guaranted income. You can start to defer once even after you've claimed your sate pension. Payment of it stops once you start to defer and resumes once you end the deferring. The increase is 5.8% per year of deferral, pro-rated for parts of a year. The usual annual increases apply while deferring. This extra income increases with the CPI inflation measure, not triple lock.

House values can increase at a faster rate than current equity release interest rates so if she picked a fixed rate for life product the percentage of the property value borrowed would probably decrease over time if new valuations were obtained. The Nationwide tracking shows an increase trend of 2.5% plus inflation per year, at the BoE's 2% target that's 4.5% nominal a year to compare to the mortgage interest rate.



As you can see most of the trend was established before 2005 and it's not been so rosy since, so the trend result may not happen for her.

Onlooker2

Talking of long running discussions look to Mortgages & Endowments and scroll down to Lifetime Mortgage,latest post 22 Sept.There you will find lots of information from both sides of the argument as to whether or not you should become involved in this way of borrowing against all the other types available on the market.Consider