Financing options with existing equity release charge

Mellitusman

Hi All,

I am looking for advice on what (if any) options are available for my parents regarding the following scenario:

1. Property value c. £385,000
2. Existing lifetime mortgage (split into three chunks with Pure Retirement at rates of 3.64, 3.99 and 4.85%).
3. Further equity release wanted c. £30-45k
4. Age of youngest parent = 75 years
5. Both retired, earning private (x1) and state pensions (both)

Considerations:
a. Pure retirement will not release any further equity due to their product lending criteria
b. Moving to another provider would require re-brokering the whole amount to access further equity from the property - but at much higher rates of interest and this would only provide a c.£30k release amount, based on initial research.
c. In 2 years time, 75% of the current released equity (+the new equity released) can be settled (as I have my tax free pension lump sum becoming available)
d. Money is required as soon as possible (going with another provider would take some time)
e. Bridging loans are not a feasible option (unless someone can state otherwise)

Any thoughts or insight would be much appreciated.

Thanks

Mellitusman

My omission, the current value of the lifetime mortgage(s) is c. £150,000...

penners324

Can they not access any of the pension pot?

Additional debt not doesn't seem very sensible.

prettyandfluffy

If you can say what the money is needed for, others may be able to suggest alternative ways of achieving it.

MWT

Mellitusman said:

b. Moving to another provider would require re-brokering the whole amount to access further equity from the property - but at much higher rates of interest and this would only provide a c.£30k release amount, based on initial research.

Even that may be challenging at current interest rates and the current youngest life at 75...

Also is there any early repayment charge for terminating the agreement and moving elsewhere?

I can't see any obvious way to get another £35-40K out of the property using equity release as things stand.

I assume the £150k figure includes all interest to date?

What is the planned use of the funds?

... knowing that may suggest alternatives or rule out some alternatives...

Mellitusman

Thanks for the response MWT. In reply:

Also is there any early repayment charge for terminating the agreement and moving elsewhere?
The ERC's are current (combined) c.£6500

I assume the £150k figure includes all interest to date?
Yes

What is the planned use of the funds?
To pay off unsecured debt.

Mellitusman

@penners324 - the pension pot you mention is mine, not theirs and as I am currently 53 it will be two years before I can get access...

MWT

Mellitusman said:

Also is there any early repayment charge for terminating the agreement and moving elsewhere?
The ERC's are current (combined) c.£6500

I assume the £150k figure includes all interest to date?
Yes

That really means there is no sense in trying to find a different ER product elsewhere and incurring a £6,500 charge and shifting the whole loan onto a higher interest rate, just to get what is likely to be less than £25k net after the move...

Mellitusman said:

What is the planned use of the funds?

To pay off unsecured debt.

I have to ask, is this their unsecured debt, or yours?

... and do you have property of your own or are you living with your parents or in rented accommodation perhaps?

Unless someone else has a bright idea I'm coming up empty on ways to use their property to secure the sort of amount you say is needed, especially for debt consolidation, but if you have your own property then perhaps there is something that can be done there?

Generally not a great idea to shift unsecured debt to secured either, but it can make sense in some circumstances.