Equity release

TimSynths

My parents have just let me know they intend to do equity release with Key Financial for £40k on a property worth £350k with an option to take a further £40k later if needed.

What do they need to look out for- I know a few years ago I heard about some unscrupulous types getting involved with this. They are both in their late 70's.

Any advice/info appreciated. 

Tim.

dimbo61

Please read up on equity release and also Key Financial !
I do love the adverts where the lovely man turns up at the home of " customers " looking to take out a equity release secured loan on their home.
Nice smiling guy making £2/3/4,000 commission 
Check the terms and conditions and get advice from a solicitor.
Early repayment charges, rolled up interest etc 

Keep_pedalling

dimbo61 said:

Please read up on equity release and also Key Financial !
I do love the adverts where the lovely man turns up at the home of " customers " looking to take out a equity release secured loan on their home.
Nice smiling guy making £2/3/4,000 commission 
Check the terms and conditions and get advice from a solicitor.
Early repayment charges, rolled up interest etc 

There is no commission, there should be a number of fixed fees including an advice fee but that will be no where near £2-4k

dimbo61

OK Sorry 
So Equity release is a great idea and all old people should sign up today 

However I am sure I have read a few posts on this website about costs of Equity release 

TimSynths

Projection of Roll-Up of Interest-

MWT

TimSynths said:

My parents have just let me know they intend to do equity release with Key Financial for £40k on a property worth £350k with an option to take a further £40k later if needed.

What do they need to look out for- I know a few years ago I heard about some unscrupulous types getting involved with this. They are both in their late 70's.

Any advice/info appreciated. 

Tim.

Understand the fees involved, that will typically be an advice fee (could be zero or up to a couple of thousand or so) legal fees and possibly product/valuation fees from the lender.

Check the features of the product they are taking, especially any early repayment fees and things like downsizing protection.

Also make sure they understand that the interest rate they have been quoted is fixed for the initial amount they borrow, but if they use the option to draw from the further £40k that has been agreed, that will be at the prevailing interest rate for their product at the time they take the further advance.

Nothing wrong with releasing equity at their age if they have a need for the money, or even if they just want to make their lives more enjoyable, it is after all their money to spent as they wish.  

TimSynths

MWT said:

Nothing wrong with releasing equity at their age if they have a need for the money, or even if they just want to make their lives more enjoyable, it is after all their money to spent as they wish.  

This is what I said to them, just wanted to make sure they were doing the right thing. Ive been through the pack and read about all the fees etc, I think initially I was just too cynical.

Keep_pedalling

dimbo61 said:

OK Sorry 
So Equity release is a great idea and all old people should sign up today 

However I am sure I have read a few posts on this website about costs of Equity release 

No one suggested that, but it can be great idea for some who are asset rich but cash poor. Most people complaining about it are children who find out they are not going to receive such a large unearned inheritance as they thought they were going to get. So many seem to resent their parents putting their own needs ahead of their children’s inheritance.

MWT

TimSynths said:

MWT said:

Nothing wrong with releasing equity at their age if they have a need for the money, or even if they just want to make their lives more enjoyable, it is after all their money to spent as they wish.  

This is what I said to them, just wanted to make sure they were doing the right thing. Ive been through the pack and read about all the fees etc, I think initially I was just too cynical.

20 years ago your cynicism would have been entirely justified, fortunately the products and the access to them is better regulated now.

kingstreet

In this context is Key an intermediary offering independent advice on the whole market or is it a lender whose representative is giving limited advice on Key's products only?

MWT

kingstreet said:

In this context is Key an intermediary offering independent advice on the whole market or is it a lender whose representative is giving limited advice on Key's products only?

When I looked at Key a couple of years ago they presented as a whole of market independent advisor working on a fixed fee basis and they still have this statement on their group website for Key ...

"Distribution of equity release and other retirement lending solutions. Advice delivery on whole of market and tied propositions, provision of estate planning and other retirement services."

...but a closer look at their Key website also has this...

"All our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £899 is only payable on completion."

Within the Key Group though they do of course have more2life as a lender.

Personally I didn't end up using them as it is very easy to pay a lot less (even zero) for the advice component, but it would seem that there product pool may be more limited in scope than it ap[pears at first glance.