Equity release charges

michael079

Hello, I'm a carer for my mother who has Parkinsons and dementia and I have power of attorney. We will soon be getting live - in carers because she had too many falls in a nursing home.

There is work that needs done on the house before carers can live here and I spoke to the company who she used previously to release equity and they said more money is available. However we are only looking for £5500 as that covers what needs doing. But the financial advisor company said it would cost £800 for the financial advisor and then also there's the £175 charge for the actual company who she has the remortgage with.

Is it worth looking around for a cheaper quotes or are the figures mentioned normal for this? Any advice would be much appreciated. 

MWT

The advice fee can be anywhere from zero upwards on a new equity release product, but it sounds like your mother already has an equity release product in place so she is looking to get a further advance from the same lender.

Can you check the original paperwork to see if she originally got approval for a larger amount than she has drawn down, as she may already have a reserve in place?

If so then there should not be any requirement for further advice, and hence no advice fee to pay...

If it is necessary to get approval for a further amount above the previously agreed total amount then there is going to be a need for advice and it may prove difficult to find an advisor willing and able to do this for much less than the fee you have been quoted.

If you do need to get further advice I would suggest that, if possible, you get approval for the maximum amount they will allow but only draw down the amount you need, so if in future she needs further amounts to help cover the cost of her care, she will not be hit with the advice fee each time...

One small point, you mentioned that she had too many falls in a nursing home, was this perhaps during respite care? ... only reason I ask is that if she had entered long-term care that would normally have triggered the need to repay the full amount of the original loan plus interest (assuming she is the only life on the equity release), so do take care to make sure that nothing you say suggests that she had entered long-term care which you are now reversing...

michael079

MWT said:

The advice fee can be anywhere from zero upwards on a new equity release product, but it sounds like your mother already has an equity release product in place so she is looking to get a further advance from the same lender.

Can you check the original paperwork to see if she originally got approval for a larger amount than she has drawn down, as she may already have a reserve in place?

If so then there should not be any requirement for further advice, and hence no advice fee to pay...

If it is necessary to get approval for a further amount above the previously agreed total amount then there is going to be a need for advice and it may prove difficult to find an advisor willing and able to do this for much less than the fee you have been quoted.

If you do need to get further advice I would suggest that, if possible, you get approval for the maximum amount they will allow but only draw down the amount you need, so if in future she needs further amounts to help cover the cost of her care, she will not be hit with the advice fee each time...

One small point, you mentioned that she had too many falls in a nursing home, was this perhaps during respite care? ... only reason I ask is that if she had entered long-term care that would normally have triggered the need to repay the full amount of the original loan plus interest (assuming she is the only life on the equity release), so do take care to make sure that nothing you say suggests that she had entered long-term care which you are now reversing...

Thanks for your insight. She didn't have a drawdown reserve and had previously taken a lump sum. When I originally spoke to the company they told me that, but when I explained the circumstances, they said maybe there's something they can do. Soon after, they told me she could get up to £30,000, but we don't want that, only need the smaller amount.

I'm confused about the financial advisor as we already know this is what we need to do, but I guess it's a required part of the process. It's just paying £1000 to get £5500 seems an awful lot. But I'll keep in mind what you said about keeping the rest of the funds open.

She was in for respite in a nursing home, and also to see how she got on, never at any point had she been admitted full time, but I appreciate you pointing that out. 

Keep_pedalling

It does not sound like you mother has much in the way of savings or income how is she going to be able to pay for live in carers?

michael079

Keep_pedalling said:

It does not sound like you mother has much in the way of savings or income how is she going to be able to pay for live in carers?

Direct payment 

MWT

michael079 said:

I'm confused about the financial advisor as we already know this is what we need to do, but I guess it's a required part of the process. It's just paying £1000 to get £5500 seems an awful lot. But I'll keep in mind what you said about keeping the rest of the funds open.

Equity Release products are regulated and the advice is a required part of the process.

You can try talking to StepChange Financial Solutions, they offer free advice, but I suspect they may not be able to help in this case as it is a further advance rather than a new product, but can't hurt to ask...

Is the advisor the same one as she used originally? ... or is this an advisor connected to the lender, like Key for example...

michael079

MWT said:

michael079 said:

I'm confused about the financial advisor as we already know this is what we need to do, but I guess it's a required part of the process. It's just paying £1000 to get £5500 seems an awful lot. But I'll keep in mind what you said about keeping the rest of the funds open.

Equity Release products are regulated and the advice is a required part of the process.

You can try talking to StepChange Financial Solutions, they offer free advice, but I suspect they may not be able to help in this case as it is a further advance rather than a new product, but can't hurt to ask...

Is the advisor the same one as she used originally? ... or is this an advisor connected to the lender, like Key for example...

Thanks I'll check them out. The quote was from the same advisor company as before, but we haven't actually been allocated an advisor yet and it was 7 years ago so not sure the actual same person is still working for them but we'll soon see. However, the advisor company is connected to the lender as far as I'm aware.

Keep_pedalling

michael079 said:

Keep_pedalling said:

It does not sound like you mother has much in the way of savings or income how is she going to be able to pay for live in carers?

Direct payment 

Interesting, how difficult was it to get live in carers funded? 

michael079

Keep_pedalling said:

michael079 said:

Keep_pedalling said:

It does not sound like you mother has much in the way of savings or income how is she going to be able to pay for live in carers?

Direct payment 

Interesting, how difficult was it to get live in carers funded? 

It was a gradual process over a few years, and only after the failures of other care options not working. And when I say live in carers, it will be one to begin with and I'd still be providing care part of the time. I'm also hoping my business will be able to pay towards additional carers soon. 

Keep_pedalling

michael079 said:

Keep_pedalling said:

michael079 said:

Keep_pedalling said:

It does not sound like you mother has much in the way of savings or income how is she going to be able to pay for live in carers?

Direct payment 

Interesting, how difficult was it to get live in carers funded? 

It was a gradual process over a few years, and only after the failures of other care options not working. And when I say live in carers, it will be one to begin with and I'd still be providing care part of the time. I'm also hoping my business will be able to pay towards additional carers soon. 

Good luck, I know your situation is far from easy.

dunstonh

Upto the drawdown amount, no adviser is required.  However, if the drawdown amount has been used up and a further amount is needed, then the adviser would make a charge.  They have to do the bulk of the work and that charge is to pay them for their work.