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Equity Release contemplation

MrCinnamon
Posts: 4 Newbie

in Loans
Looking for others thoughts on our situation. We are married, aged 59 & 56 this year. Both working & wishing to retire in next 2-3 years maximum. We still have a £90,000 mortgage. We have an estimated private pension income of 40,000/ annum & will (all being well) both get maximum state pension at state retirement age. So far so good.
We do not plan to move house, neither of us have any family we wish to leave anything to. We would like to be mortgage free and also get a loft conversion and garden landscape done. We have about £20 k savings which we are keeping for emergencies.
...so we are considering equity release to pay off the mortgage, fund the renovations and enjoy retirement whilst we are still young & fit enough to do so. I see far too many people in my line of work who carry on until their late sixties/ seventies and are then too old & frail to do what they want to do. We re both very aware of our mortality & wish to spend our time together enjoying what we have.
So is equity release still a barking mad idea for us & our situation? Are there viable alternatives? I find lots of warnings and bad reviews of equity release but little from punters who are endorsing it. Have you taken equity release & if so, do you regret it or celebrate what it has offered you?
Thanks.
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Comments
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Equity release is ludicrously expensive as the loan has compound interest and as no capital is paid back, you can end up owing a fortune. I looked at it the other day for a discussion, borrowing £177k on a £400k mortgage, at the end of 15 years that debt was over £420k.
Why would you borrow money on top of your mortgage when you have £20k savings sitting around probably earning peanuts? What emergency needs that much money just sat around? You could do the priority job (whether that is garden or loft) and pay it from the savings and then build some up again until you need the other bit doing.
Or just get a normal loan at a low % over say 3-5 years and pay that off, again far cheaper than equity release1 -
We wouldn't "owe" anything as when it is "paid" back we will both be dead (or in permanent residential care). Again a normal ;oan would have to be paid during our retirement, you do not pay anything back with equity release.
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The info in the following link is purportedly unbiased -
https://www.unbiased.co.uk/life/homes-property/is-equity-release-safe-the-pros-and-cons#Is equity release a good idea for me?
But you can have a google yourself and lots of links pop up.
Such as this one - https://www.moneyhelper.org.uk/en/homes/buying-a-home/equity-release-help
Most people on this forum (I hope) would advise you to obtain advice from an impartial financial adviser. In the link from moneyhelper, above, there's a recommendation to contact Stepchange for a chat about equity release. Their advice is free so you can have a chat with someone there too. Once you've done all your research, you'll both be in a better position to make the best decision for you.Please note - taken from the Forum Rules and amended for my own personal use (with thanks) : It is up to you to investigate, check, double-check and check yet again before you make any decisions or take any action based on any information you glean from any of my posts. Although I do carry out careful research before posting and never intend to mislead or supply out-of-date or incorrect information, please do not rely 100% on what you are reading. Verify everything in order to protect yourself as you are responsible for any action you consequently take.2 -
MrCinnamon said:We wouldn't "owe" anything as when it is "paid" back we will both be dead (or in permanent residential care). Again a normal ;oan would have to be paid during our retirement, you do not pay anything back with equity release.0
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Seems to me that a sensible thing to start with would be getting an equity release quote. At your ages, you may find that they will lend less than you want but that would presumably depend on the house value.Hitting zero assets when the second of you die seems a fine aim, but might restrict your choices in later years - you don't want to move now, but how practical would your house be if you developed mobility problems, or couldn't drive or something? Equity release might seriously complicate moving. It might also mean you didn't have enough assets to pay for the care you wanted.But a banker, engaged at enormous expense,Had the whole of their cash in his care.
Lewis Carroll1 -
MrCinnamon said:Looking for others thoughts on our situation. We are married, aged 59 & 56 this year.
Althoguh theoretically possible, that seems very young to be considering equity release. It could easily be 25/30 years before the company is going to be able to realise their investment, so chances are you are not going to actually get a good quote.
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Given your age, how young you want to retire, and the amount still outstanding, this sounds like a very bad idea. How much have you been told that you could release, and what does that leave you once you’ve repaid your current mortgage?
Early retirement is a great idea for many people, but funding it with a huge loan is rarely recommended. Would it not make much more sense to spend three or four more years getting rid of the current debt so that you don’t need to try to borrow your way to comfort?1 -
Borrowing by way of a Lifetime Mortgage is the only way that attracts Compounding Interest charges against anybodies loan..Interest is charged annually against your outstanding loan plus interest already due..This will mean an ever increasing debt against your said property.Ask for written evidence of your debt in your future 5/10/15/20/25 years.at least.0
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