equity relaese advice please

mirrorimage0

hi al my nan has owned her house for nany yrs she has no mortgage on it but has no money either and she keeps lookinginto these places that buy your house and let you live in it or equity release so she has some omoney to do things up around the house,
now as you can probably tell seeing as im asking for advice i really dont understand any of this so could someone please help and explain it to me, thankyou very much.x

dan1979

Equity release mortgage:

You basically receive a lump sum against a % of the property value.

Say the property is worth £200, you get a mortgage against it and £20k is given.

The mortgage doesn't get paid back in the conventional sense, instead the mortgage lender takes a charge agaisnt the property, all the while the amount that was borrowed increases due to interest.

When the person dies the mortgage company want their money.

At a very rough figure the £20k you took would turn into £40k after about ten years.

You will need a financial adviser (+ legal advice) to sort all this as it's all heavily regulated for obvious reasons.

mirrorimage0

thankyou.x

UK007BullDog

Don't go down the "sell and rent" route as a lot of unscrupulous companies are out there ripping off people and throwing them out after 6 months because they put up the rent very high. Plus they pay under value.

So it would be better to sell on the open market and find a place to rent.

However this might mean you would have to move quite often and old people do not move well.

Best is to look into equity release and that means you have to find an adviser that specialises in this field.

poppy10_2

There are a lot of unscrupulous lenders operating in this area, who will buy the whole house off you and promise to let you live there - only to serve you notice and chuck you out a few months down the line. This is often called a "sell and rent back" company.

What it sounds like your mum needs is simply some equity release - she can get a mortgage on her house from a reputable bank, receive the cash, and just pay off a token amount.

Check here for safe plans:
http://www.ship-ltd.org/

[Deleted User]

Wouldn't be best for her to downsize?

margaretclare

I responded to the OP in this thread:

http://forums.moneysavingexpert.com/showthread.html?t=731325

Margaret