Debt Free at 63... What next?... [Equity release on mortgage free house 2025]

peejaydj

Hi, I need some sage advice from our fantastic hive-mind 
I am considering equity release on mortgage free house in the next couple of years.                    Sadly my son died a couple of years ago so I now have no family I want to leave my inheritance to.                                                                                                                                                          

• I am single, 63 (still work  teaching 3/7 days and reach pension age at 66)  
• I own my house mortgage free (value around £200k) 
• Have a bit of savings (£25kish) and can access a Teachers pension around £1k/month when I do finally retire.

What now???? I have really not decided what I want to do yet but need to look to the future for sanity's sake...
I am considering options including potentially buying a small 2nd property somewhere nice (holiday/bolt hole ??? etc...) by using some/all of the equity I have from my present 1st house. 
I`m rubbish at this kind of stuff but willing to learn, I dont know what is best to investigate for equity release to repay after my death.

• Is it a Reverse Mortgage (or other) I should explore? 
• Legal conditions implications of that?
• What are the main costs to set this up (a ball park figure would be amazingly useful)?
• What happens if I ever want to sell or downsize?

Can any one point me in the right direction before I shell out for costly financial advisor and get tied in to anything I dont understand.

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My back story/motivation: If you are interested read on..... otherwise feel free to just ignore.  

I want to selfishly utilise the wealth I have accrued and spend it on my own future while I can; (why not?) What have I got to lose now?
I have spent a debt free life skimping with a `scarcity mindset`  and it feels like it is time to escape my Protestant work ethic programming     and live a little... This may chime with some of you out there??
I am still fit and healthy and am planning to live  my best life for at least another 25 years!  ...so have a lot of time ahead to enrich my life.
Just need a little input as I have no family to discuss with now.
I just need to  psychologically feel 100% financially  and materially secure ie. still have my house to stay in as long as I want to and keep all other  technical outgoings to the minimum.

Thank you in advance.
Paul

Blackcats

Hello and welcome.

its a great idea to think of ideas to plan for maximising enjoyment from retirement.  I retired a couple of years ago and love it.
second homes are expensive to buy - additional stamp duty etc and running costs for bills etc can add up.  We thought about it but instead chose the freedom to visit different places and stay in hotels or air bnb's.
i'm sure others will join in with their 2 penneth worth to help your thinking.

Ordinary_Yet_Unique

Personally I would not buy a second home. Nothing like the security of a mortgage free house in retirement. With your teacher’s pension and state pension from 66 you will have a guaranteed income for the rest of your life that is index linked. At present values, according to the figure you give for your TPS, you would have  an annual gross income of £24000 a year. With budgeting you could afford some good holidays. You already have a decent emergency and fun fund of £25000.

Have you checked you are on course to receive the full state pension ? Just asking as you may have been contracted for a few years when part of the TPS . How many years have you been teaching? Do you have any other pensions? Your teacher’s pension may also come with a lump sum.

You are currently in a decent financial position. I would, if I were you, be reluctant to put that at risk.

joedenise

You can live much more cheaply once retired.  We could never afford All Inclusive holidays but since retirement we have at least a couple of year.  We also have cheap motorhome holidays (our motorhome we've had for about 12 years and it's now 23 years old!).

I have a small work pension plus state pension and DH only has his state pension.

I don't think you need to use equity release for your retirement.  You should be able to do what you want with your work and state pensions.

Organgrinder

By my calculations you'll have over £1,800 per month after tax at 66. 

I would look at your outgoings and set a realistic budget and then look at what is left.

As mentioned above you should be able to get some pretty good holidays. Term time prices can be very good allowing you to do a month's all inclusive to say Tunisia in March for about £1,200 for example. (Just an option, not sure I'd like a month in a hotel room but if you don't mind cooking you can find many nice apartments for say a month in Malta for around £800 including the flight). Doing this gives you the flexibility to go anywhere you like without the burden of all those extra costs. A chance to see the world albeit on a budget.

I'd be inclined to keep the £25k for a rainy day eg emergency house repairs.

Whatever you do, good luck with it. What may sound great to some, may sound horrible to others. 

dreaming

@peejaydj - first of all I would like to say how sorry I am to hear about the loss of your son. I also lost my son 4 years ago when he was 41 so I know that although you learn to live around the grief it can leave a big impact on your life. I am fortunate that I still have my lovely daughter but recently I took out an equity release mortgage in order to a) gift her some money towards a deposit for her own house; and b) to get a few things sorted on my own mortgage free property. For my daughter, she has been saving hard at the same time as paying rent (she is determinedly single) and buying a house seemed years away. As she will be the sole beneficiary of my estate when I die anyway, I decided I would rather give her some cash now and be able to see her settled and she will be moving into her own place this week. I'm not sure who is more excited - me or her . I took early retirement  years ago when I was 58 (where does the time go?), and although I have a good pension income from both state and company, plus some savings, I wanted to get a few bigger jobs done on the house I live in to make life a bit easier for me as I age. As I have suffered some major illnesses in the last couple of years that's has hit me earlier than I had hoped, but that's life. I had always been in the position of saving to get one job done, then saving again for the next but decided to bite the bullet, release some equity and do what I wanted. I took out a "drawdown" plan but did not take all of the cash approved - just enough to add to the savings I already had to get my jobs completed and gift to my daughter. Although it will wipe out most of my savings, with interest rates dropping that's not such a big deal and I can always drawdown the rest of the equity release in an emergency (although I do still have an emergency savings amount plus some premium bonds which I also class as "emergency funds"). I am repaying the interest part of the equity release monthly so that won't compound, and I also have the ability to repay 10% of the drawn down amount each year, which I may start to do next year when all my works are complete and my budget is back to normal. Personally I woul not want to buy a second property but if that is your dream then I would say give it some serious consideration, taking into account what previous, more knowledgeable posters have commented. It can be a difficult decison to take if you don't feel you have people to discuss it with in person. I know my brother would have counselled against it without even listening to my reasons, and I obviously didn't want to discuss it with my daughter too much, although I did tell her once I had looked into it with a financial adviser. Most of my friends are in relationships and have a different dynamic when it comes to finances and future inheritance issues. All I can suggest is take some time to work out what you really want to gain from it should you go ahead, look carefully at your budget (both now and projected income when you retire), and  speak to a financial adviser to learn more about options, then good luck with whatever you choose to do. Apologies for my long post.

dreaming

Oh dear, after that long post I forgot to answer a couple of your questions. The cost of setting it all up was around £2,600 which was for financial adviser. survey, and mortgage application fee. If I had not proceeded the financial advice would not have been charged. Also, I can port the mortgage to another property with approval from the mortgagor if I wish to move, or repay the loan entirely subject to a reducing early redemption charge.

peejaydj

So far thank you all SO much!
I have scan read your kind posts but need to have a good mull over some of the excellent advice you have given so I am digesting mode right now. I had gone off the idea of buying a 2nd home before I caught up with you all, I could really  only  have afforded either had to buy a flat somewhere not so nice or a Park home. and reading about Park Homes on here totally put me off!
I also had a chat with a  recently (post covid) retired friend who is now living his `best life` travelling like mad, big hols too... Canada, NZ, S Am, and Med about every 2-3 months .. (but he has a much bigger pension). However  over a pint we came to the conclusion that this was just me `clinging` again and that buying a new house was just pandering to exactly  the same insecurity/scarcity mindset  that I am trying to break!!      
ie. whats the  flippin` point!    I need `release` not tie myself up more.....something rich and challenging to add purpose not just same old thing. (please excuse all the psycho babble but examining my motivation will help me arrive at a more realistic goal)
So, I am now investigating 1. managing the funds I have carefully while having a  few splurge holidays and as Blackcats & Organgrinder said:   

By my calculations you'll have over £1,800 per month after tax at 66. 
I would look at your outgoings and set a realistic budget and then look at what is left.
As mentioned above you should be able to get some pretty good holidays. Term time prices can be very good allowing you to do a month's all inclusive to say Tunisia in March for about £1,200 for example...... Doing this gives you the flexibility to go anywhere you like without the burden of all those extra costs. A chance to see the world albeit on a budget.

I hadn`t clocked that  of course I would be able to travel term time... good call!   and yes I calculate about £1800 to 2+k/month (actually close to what I earn now on 3 days)

dreaming said:

 Apologies for my long post.

Don`t apologise for your lovely  empathic, thoughtful and helpful post! I need to think about some of this I don`t understand the `drawdown stuff yet, but will go away and research. (FYI my son was my sole heir which might give further context)
 I have swiftly perused Equity release. really dont understand it yet or what it entails in reality and was really disappointed to discover on my £200k house I would only get a lump of around £75! (I thought I could get around £160k. 
[I am quite gobsmacked about the  huge % cuts scavenger schemes like this take for essentially doing very little... However this is nothing to my opinion of care homes  who seem to leach poor & vulnerable folks life-savings over a mere few months leaves a bitter taste. I would much prefer a flight to Switzerland and deprive them.... anyway I digress into cynicism here which I am determined not to do    )

joedenise said:

I don't think you need to use equity release for your retirement.  You should be able to do what you want with your work and state pensions.

Mmm ..  you mean play it canny and `manage` my funds carefully....... definitely food for thought there.
 
Ordinary_Yet_Unique said:

Personally I would not buy a second home.  Your teacher’s pension may also come with a lump sum.
You are currently in a decent financial position. I would, if I were you, be reluctant to put that at risk.

yeh, have gone off the 2nd home idea. Correct I forgot !! yes I do get about £20k lump sum too teachers pension (thanks for reminding me ... Doh!) Also thanks for the confidence boost that I`m in a decent-ish place realistically.   I need to spend/save at the correct as I  go. Blackcats said:

Hello and welcome.

its a great idea to think of ideas to plan for maximising enjoyment from retirement.  I retired a couple of years ago and love it.
second homes are expensive to buy - additional stamp duty etc and running costs for bills etc can add up.  We thought about it but instead chose the freedom to visit different places and stay in hotels or air bnb's.
i'm sure others will join in with their 2 penneth worth to help your thinking.

 Realistically I have 3 years to fully decide so I can deep dive into the details at my leisure. Also the longer I put it off I believe the better the equity release will be???
On a positive note I have decided to  plan to potentially visit Canada in 2026.. Ok it may cost £2-3+k  which sounds a lot (well to me anyway)   But it is maybe just what I need to  ie a goal to look forward to, to break out and start to move forwards.
Please continue to join in with your 2 penneth`s as even scanning this I feel potential pathways forming!
Thank you all again, this is so helpful!

joedenise

I use regular savers to save for our holidays.  I opened a First Direct Account specifically to be able to use their regular saver as it pays 7% interest and you can save £300 per month.

Organgrinder

peejaydj said:

So far thank you all SO much!
I have scan read your kind posts but need to have a good mull over some of the excellent advice you have given so I am digesting mode right now. I had gone off the idea of buying a 2nd home before I caught up with you all, I could really  only  have afforded either had to buy a flat somewhere not so nice or a Park home. and reading about Park Homes on here totally put me off!
I also had a chat with a  recently (post covid) retired friend who is now living his `best life` travelling like mad, big hols too... Canada, NZ, S Am, and Med about every 2-3 months .. (but he has a much bigger pension). However  over a pint we came to the conclusion that this was just me `clinging` again and that buying a new house was just pandering to exactly  the same insecurity/scarcity mindset  that I am trying to break!!      
ie. whats the  flippin` point!    I need `release` not tie myself up more.....something rich and challenging to add purpose not just same old thing. (please excuse all the psycho babble but examining my motivation will help me arrive at a more realistic goal)
So, I am now investigating 1. managing the funds I have carefully while having a  few splurge holidays and as Blackcats & Organgrinder said:   

By my calculations you'll have over £1,800 per month after tax at 66. 
I would look at your outgoings and set a realistic budget and then look at what is left.
As mentioned above you should be able to get some pretty good holidays. Term time prices can be very good allowing you to do a month's all inclusive to say Tunisia in March for about £1,200 for example...... Doing this gives you the flexibility to go anywhere you like without the burden of all those extra costs. A chance to see the world albeit on a budget.

I hadn`t clocked that  of course I would be able to travel term time... good call!   and yes I calculate about £1800 to 2+k/month (actually close to what I earn now on 3 days)

dreaming said:

 Apologies for my long post.

Don`t apologise for your lovely  empathic, thoughtful and helpful post! I need to think about some of this I don`t understand the `drawdown stuff yet, but will go away and research. (FYI my son was my sole heir which might give further context)
 I have swiftly perused Equity release. really dont understand it yet or what it entails in reality and was really disappointed to discover on my £200k house I would only get a lump of around £75! (I thought I could get around £160k. 
[I am quite gobsmacked about the  huge % cuts scavenger schemes like this take for essentially doing very little... However this is nothing to my opinion of care homes  who seem to leach poor & vulnerable folks life-savings over a mere few months leaves a bitter taste. I would much prefer a flight to Switzerland and deprive them.... anyway I digress into cynicism here which I am determined not to do    )

joedenise said:

I don't think you need to use equity release for your retirement.  You should be able to do what you want with your work and state pensions.

Mmm ..  you mean play it canny and `manage` my funds carefully....... definitely food for thought there.
 
Ordinary_Yet_Unique said:

Personally I would not buy a second home.  Your teacher’s pension may also come with a lump sum.
You are currently in a decent financial position. I would, if I were you, be reluctant to put that at risk.

yeh, have gone off the 2nd home idea. Correct I forgot !! yes I do get about £20k lump sum too teachers pension (thanks for reminding me ... Doh!) Also thanks for the confidence boost that I`m in a decent-ish place realistically.   I need to spend/save at the correct as I  go. Blackcats said:

Hello and welcome.

its a great idea to think of ideas to plan for maximising enjoyment from retirement.  I retired a couple of years ago and love it.
second homes are expensive to buy - additional stamp duty etc and running costs for bills etc can add up.  We thought about it but instead chose the freedom to visit different places and stay in hotels or air bnb's.
i'm sure others will join in with their 2 penneth worth to help your thinking.

 Realistically I have 3 years to fully decide so I can deep dive into the details at my leisure. Also the longer I put it off I believe the better the equity release will be???
On a positive note I have decided to  plan to potentially visit Canada in 2026.. Ok it may cost £2-3+k  which sounds a lot (well to me anyway)   But it is maybe just what I need to  ie a goal to look forward to, to break out and start to move forwards.
Please continue to join in with your 2 penneth`s as even scanning this I feel potential pathways forming!
Thank you all again, this is so helpful!

Just to add. Remember it's possible to take advantage of bank switching, cashback sites, changing providers etc etc to make hundreds of pounds extra, for that extra cheeky break you can't quite afford.

Eg....Topcashback (over £700 for me this year). Bank switching (around £2000 in total). Etc. It doesn't take long, literally minutes.

For holidays, shop around. Be flexible with your dates. Be adventurous if you see a bargain at short notice eg I once had a weekend to Lisbon for £130 plus food.

Live your best life and enjoy it. If you feel you can't afford something, don't accept it, go and find the means to do it.

in_need_of_direction

my tuppence worth is that you never know what's around the corner.  Retirement age doesn't mean written off as it used to.  you could meet new people, want to change your living arrangements, etc.  unless you actually need money, keep your options as open as you can.  in the meantime, take care