Equity release

ronno1

Hello 

my house is worth at least £350,000

it would seem I could release ££140,000 in the next 3 months

if I were to release £140.000

can you advise how much I would owe in 5 yrs time , 

in 10yrs time, in 15 yrs time and in 20 years time based on current interest rates which I am aware are subject to fluctuations. I don’t understand how to work out compound interest and so would like to have an idea of figures to inform my decision making

dimbo61

Before you even think of equity release you need to take a look at the big picture ?
Why do you need money ?
Are you claiming all the benefits your entitled to?
What about your pension,s ? 
Pension credit ? Savings, 
Downsizing to a smaller,  cheaper property  ?
No one on here is going to guess how much you will owe in 5/10/15 years without the full details of Interest rates and fees.
The lovely smiling guy on the  TV who visits people at home is walking out with a HUGE fat fee every time he gets someone signed up to equity release.
You need professional help think CAB, IFA, Accountant , Solicitor before you sign anything 

Mark_d

Typically I think you don't have to pay anything back with equity release.  The money is repaid when you die.
Or are you talking about taking out a mortgage (secured loan) against your property and repaying it monthly?

BarelySentientAI

Mark_d said:

Typically I think you don't have to pay anything back with equity release.  The money is repaid when you die.
Or are you talking about taking out a mortgage (secured loan) against your property and repaying it monthly?

I think OP is trying to work out how much would be taken from their estate if they died after 5, 10, 20 years (or could pay off if they came by a lump sum).

I could be wrong though.

MWT

dimbo61 said:

You need professional help think CAB, IFA, Accountant , Solicitor before you sign anything 

You have to take advice before proceeding with equity release products and that necessarily involves producing a clear statement of how much will be owed over the years ahead and making sure that alternatives like down-sizing have been considered...

I would not suggest that CAB are going to be much help and IFA/Accountant will also come with their own fees attached, as will most but not all ER advisors.

Talking to StepChange would probably make sense as they are one of the few that do not charge a fee for their advice on ER products.

MWT

ronno1 said:

if I were to release £140.000

can you advise how much I would owe in 5 yrs time , 

in 10yrs time, in 15 yrs time and in 20 years time based on current interest rates which I am aware are subject to fluctuations. I don’t understand how to work out compound interest and so would like to have an idea of figures to inform my decision making

If you start down the path towards equity release, the advice you will receive will cover the answer to this question in detail, but very roughly, if the interest rate was 5.5% AER, after 5 years your £140k would be up to around £182k.

By 10 years that would be £240k and by 15 years around £312k.

To get £140k out a property worth £350k you are probably at least 70 years old at the moment, if not a little older, and the lender is going to be factoring in the chances of you reaching 20 years, as that would put the value of the loan at around £408k, but of course the value of your house then will not be £350k any more either...

Even a 1% rise in value per year would keep your property price above the loan through the next 20 years or so and even if prices fell, your estate will never have to repay more than the value of the house at the time of your demise or entry into long term care.

Part of the advice you will receive will also make it clear that by doing this sort of thing you greatly reduce the amount of capital you would have after the sale of the house upon entering long term care (if that happens) and that should be something you should thing about.

ER should be the last option for most people, not the first, so I would strongly suggest talking to StepChange as they will not charge you a fee, but will help you understand if this really is the best route for your needs...

Bigphil1474

Bad idea, but at least read up about all the pros and cons before even contacting a company. My FIL took out an equity release about 25 years ago, it had nearly trebled when he died last year. Went from about 10% of the house value to about 20% in that time. Have you thought of selling up and buying somewhere smaller to release funds?