Is equity release the only option

in-it-to-win-it_4

My inlaws are 69 and 71. They have a loan, a little on credit cards, no mortgage with a property value of approximately £250k. They would like to raise some cash of about £60k. Is equity release the only answer? If so is this wise at their age and what happens if one of them dies or get's sick before the other and they want to sell the house to downsize, move into assisted care or for other reasons.

Thanks in advance for any advise.

inmypocketnottheirs

Sell and buy smaller now to release capital?

EdInvestor

Downsizing is cheaper, but equity release is certainly an option - their age is favourable for good terms.

what happens if one of them dies

No effect

or get's sick before the other and they want to sell the house to downsize, move into assisted care or for other reasons.

That's fine, they sell the house, redeem the loan and move. Note that at current interest rates, the loan will roughly double in size over 10 years. Of course the value of the home would be expected to rise over the period as well.

It is beter to choose a loan with a "drawdown" facility, where you take money out when you need it, not all at the start, as the interest clock only starts ticking when the money is withdrawn. So if they think they want a total of 60 over say 15 years, but only 10k now, they can take the 10k and have the rest in the drawdown pot to be taken as required.That will be a much more efficient way of running the mortgage than taking the whole 60k and putting 50k in the bank.

in-it-to-win-it_4

Thanks, they live in a 2 bed semi-bungalow and the only downsized option is a maisonette or flat. Ground floor in our area are approx about £175k and not probably in the good order that their bungalow is in so downsizing is probably not an answer when they both sleep in separate bedrooms anyhow.

Where is a good place to get equity release advise from? They bank with Nationwide and Lloyds, Nationwide they were mortgaged with and they hold the deeds. Are their any companies that offer more flexibility than others? Also can you pay off these mortgages/loans etc buying back the proportion of property at a later date?

dunstonh

Where is a good place to get equity release advise from?

An IFA that specialises in equity release. Loads around the country.

Are their any companies that offer more flexibility than others?

There isnt a massive selection of providers in this area but there are differences in the offerings.

Also can you pay off these mortgages/loans etc buying back the proportion of property at a later date?

usually with modern versions. However, equity release is generally considered a last resort option. If there are funds available elewhere then they should be taken into account as to whether they should be used first.

UK007BullDog

You can check on https://www.unbiased.co.uk for equity release advisers.

Also why not plan now if they could need assisted living in the future and buy one of those retirement flats or houses now. They might then have enough money left to live off.

in-it-to-win-it_4

They don't want to do it until they have to. At the moment they are both well and healthy and would rather only go down that route if they need too. Plus they love where they live, it is easy walk to the shops, bus etc.

Thank you for your advise. I am going to look around for a local IFA.

zarazara

in-it-to-win-it wrote: »

They don't want to do it until they have to. At the moment they are both well and healthy and would rather only go down that route if they need too. Plus they love where they live, it is easy walk to the shops, bus etc.

Thank you for your advise. I am going to look around for a local IFA.[/quot



my friends downsized a couple of years ago from a small 2 bed bungalow to a ground floor flat 1 bedroom. this released equity. they dont regret it,the flat is cheaper to run and they have no debts.

in-it-to-win-it_4

Thanks, it is an option, but they really don't want to sell where they currently live at the moment.

poppy10_2

This is a good place to start, it will help you avoid the many sharks operating in this area.
http://www.ship-ltd.org/