Help please - Bridge the gap 60 to 67 Equity Release due to ill health.

jaller79

Message regarding Equity Release:

My ex-wife, diagnosed with spondylitis and experiencing pain, is a dedicated teaching assistant at 58. However, she's uncertain about managing this physically demanding job beyond the age of 60.

Post-divorce, she became wealthier in terms of equity, owning a mortgage-free property valued at 250k. Mortgage Free currently.

Considering her need for financial support from 60 to 67, is releasing 70,000 feasible to provide an annual income of 10,000?

Exploring options:

1. Downsizing to purchase a flat for Buy-to-Let (BTL) purposes. as noted lots of hassle.

1a. Downsixing to release the 70K

2. Consider the implications of extending the mortgage term.

3. Exploring the possibility of renting out a spare room.

4. Evaluating the option of a Life time mortgage with long term release to top up less hours of another job less physical.

lisyloo

Does she have a defined benefit teachers pension?
has she looked into the option of early retirement on ill health grounds?
has she considered less physically demanding work?

MWT

jaller79 said:

Post-divorce, she became wealthier in terms of equity, owning a mortgage-free property valued at 250k.

Considering her need for financial support from 60 to 67, is releasing 70,000 feasible to provide an annual income of 10,000?

At age 60 getting £70k out of a property valued at £250k may be achievable but it will be at the top of the range that is achievable and will not be one for all lenders. ... and of course there may be changes in value between now and then as well as interest rates etc.

jaller79 said:

1. Downsizing to purchase a flat for Buy-to-Let (BTL) purposes.

She isn't starting with a high value property but you would know the likely cost of flats and smaller properties in her area better than us, but even if it is possible after taking into account the costs of selling and buying, there is no certainty that she is going to make sufficient profit from the rental and that there will not be costs associated with the ongoing maintenance etc. so unless she has a burning desire to become a landlord with all that entails, I'm not sure that is a great option...

jaller79 said:

2. Considering the implications of extending the mortgage term.

Which mortgage would that be?

The equity release and RIO do not have a fixed term so not sure what you are looking at here...?

If there is another mortgage on her current property that would have to be fully paid off before she could get equity release or a RIO on that property...

jaller79 said:

4. Evaluating the option of a retirement interest-only mortgage and investing 70k into a BTL flat.

Same comments about the landlord aspect as before, but consider that at the time she takes the RIO product she has to be able to show she has sufficient guaranteed income in retirement to be able to afford the interest payments, so the potential for income from the rental property would probably not be accepted as it does not exist at that point.

The allowed use of funds from a RIO is very liberal, but do check if purchasing rental property is allowed as it does potentially cross the line into business investment which is often not permitted.

Yorkie1

Unless you are experienced landlords already, it's not a business for the faint-hearted. The landscape in terms of regulation has changed significantly over recent years.