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  • FIRST POST
    • MSE Rosie
    • By MSE Rosie 26th Jun 18, 3:10 PM
    • 88Posts
    • 40Thanks
    MSE Rosie
    Equity Release guide discussion
    • #1
    • 26th Jun 18, 3:10 PM
    Equity Release guide discussion 26th Jun 18 at 3:10 PM

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Page 3
    • Darren Amos
    • By Darren Amos 6th Feb 19, 5:21 PM
    • 5 Posts
    • 0 Thanks
    Darren Amos
    Unsuitable property
    When you mortgage a normal purchase the lender knows that one day the mortgage will be paid off. So if the property has a clause on its deeds, or is of odd construction that's your problem if you can't sell it.
    As an Equity Release Lifetime mortgage is only paid off when you die (or go into care) it is their problem if it doesn't sell, so they won't offer a mortgage just in case.
    • Darren Amos
    • By Darren Amos 6th Feb 19, 5:31 PM
    • 5 Posts
    • 0 Thanks
    Darren Amos
    Portability
    You do not have to pay off the mortgage unless you want to.
    If you want to move house and the property you are going to is acceptable then you can port your mortgage too, just as you can with a conventional mortgage
    However, Equity Release Lifetime mortgages are based on a Loan to Value in line with your age, so this could affect things.
    For example at 65 you might be allowed 30% Loan to value. You live in a £200,000 home and therefore borrow £60,000.
    A few years later (at 70) you might owe £75,000 and your house is worth £220,000. At 70 the maximum loan to value is perhaps 35%.
    If you move to a property that is worth £250,000 then you can port your whole mortgage as £75,000 is less than 35% of £250,000.
    If you instead downsize to a property worth £200,000 then your existing mortgage is more than 35% of £200,000 (37.5% in fact). You would usually have to repay sufficient from your sale proceeds to reduce the mortgage to 35%. In this case £5,000.
    • Darren Amos
    • By Darren Amos 6th Feb 19, 5:37 PM
    • 5 Posts
    • 0 Thanks
    Darren Amos
    Interest rates
    Yes interest rates can be higher, although they do start at around 3.8%.
    However, these are FIXED FOR LIFE. This means taking out an Equity Release lifetime mortgage at 65 the lender could be fixing your rate for 20 or 30 years, or even longer.
    So of course they are higher
    If you take out a conventional mortgage on a 2yr or 5yr fix then the 5yr fix will normally cost more. There are some 10 year fixes that are even higher.
    Couple that with the fact it's likely you'll be paying higher rates over the next 20/30 years, How many remember mortgage rates being consistently over 6% and even rising to 16% in the past. If you offered someone back then a 30 year fix at even 5% they would have snapped your hand off.
    • Darren Amos
    • By Darren Amos 6th Feb 19, 5:58 PM
    • 5 Posts
    • 0 Thanks
    Darren Amos
    Equity erosion
    If someone takes 30% out of their property and they pay 5% interest then yes the debt rises., But so does the house value usually.
    If you borrow £30,000 on a £100,000 property (30%) you'll start with £70,000 equity.
    At 5% over 20 years you'll owe about £80,000, so even if house prices don't rise EVER you'll still have £20,000 left.
    If house prices only rise by 2% per annum average the house would be worth about £149,000 so you would have about the same equity
    • Darren Amos
    • By Darren Amos 6th Feb 19, 6:21 PM
    • 5 Posts
    • 0 Thanks
    Darren Amos
    Buy to Let
    You can do Buy to Let but obviously loan to values mean you will require a bigger deposit than is required for a conventional Buy to Let mortgage.
    As with all equity Release the property needs to be acceptable, so flats might be more restricted.
    Note you cannot get Equity release without using a qualified adviser and solicitor, so it may cost you more. As you can get a conventional Buy to Let mortgage that runs to over 100 you'd be better served looking at that first, and any Equity release adviser would consider that option, just as I would
    • KPJ 0771
    • By KPJ 0771 20th Feb 19, 7:26 PM
    • 6 Posts
    • 0 Thanks
    KPJ 0771
    Equity release
    my idea is to use equity release to build a ground floor bedroon amd shower room, for access problems, would this be a decent situation for me, i have no serious need in worring about leaving an estate, but still looking for value for money/able to live on home.
    Last edited by KPJ 0771; 21-02-2019 at 9:09 AM.
    • b6204
    • By b6204 25th Feb 19, 8:41 AM
    • 5 Posts
    • 7 Thanks
    b6204
    Equity release
    Could anyone advise me on how I can help my Mum to find out who she took Equity Release with for her property. She is trying to get her affairs in order and can't remember who the company was who she took the equity release with about 15 years+ ago. She has not been able to locate any paperwork connected with the ER and is becoming very stressed about what will happen in the event of her death. She owns the property outright. Thanks for your help
    • badmemory
    • By badmemory 25th Feb 19, 6:39 PM
    • 2,602 Posts
    • 4,116 Thanks
    badmemory
    Have you tried land registry as the property should have a charge on it - to stop it being sold without the equity release co getting their money back?
    • b6204
    • By b6204 25th Feb 19, 7:46 PM
    • 5 Posts
    • 7 Thanks
    b6204
    Equity release
    Thank you for your advice. I have tired Land Registry and have found the company. We are now waiting for information re the ER for my mum. Many thanks.
    • Granny10
    • By Granny10 26th Feb 19, 10:29 AM
    • 1 Posts
    • 0 Thanks
    Granny10
    Shared Ownership
    Hello,

    We have a 35% share (worth £130,00) in a shared ownership property and would like to get our daughter and husband a deposit for a house as they are expecting a baby.

    They are both teachers and earn enough to pay a mortgage but earn a little too much to be considered for shared ownership themselves. They are also paying off hefty student loan debts.

    They have some savings and we would only need to raise £15,000 to help them get a deposit.

    Does anyone know whether we would be considered for Equity Release?

    I have a 94 year old mother from whom I will eventually inherit several times this amount and our house is in a popular area of South East London near to Green Belt so we expect it to keep increasing a little in value.

    Would we pay extortionate fees to release this amount of equity and could we pay it all back and clear the debt within a few years when I do inherit?

    Would be very hateful for any advice.

    Thank you.
    • Browntoa
    • By Browntoa 26th Feb 19, 10:50 AM
    • 35,398 Posts
    • 41,486 Thanks
    Browntoa
    Had a quick look and not even sure if it's possible with a shared ownership property

    There are fees of around £1500 to arrange

    You can pay it back at any time but interest is rolling up at an unattractive 5-6% until you do

    It's an expensive way to release only £15000
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's , Boost your income and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • badmemory
    • By badmemory 27th Feb 19, 2:54 PM
    • 2,602 Posts
    • 4,116 Thanks
    badmemory
    Surely for such a small (well relatively) amount one of the new mortgages would be more appropriate than equity release.
    • Browntoa
    • By Browntoa 14th Apr 19, 6:57 AM
    • 35,398 Posts
    • 41,486 Thanks
    Browntoa
    Interesting Which article on Equity release
    All the products and alternative options. Also weighs the pros and cons

    Which?: Equity release: can you get a wage from your home? Ė Which? News.
    https://www.which.co.uk/news/2019/04/equity-release-schemes-offer-homeowners-monthly-salary-in-retirement/
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's , Boost your income and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • avonstour
    • By avonstour 13th May 19, 7:41 PM
    • 3 Posts
    • 0 Thanks
    avonstour
    Paying off mothers equity release loan, worth it?
    Not sure if it's worth it, any pointers appreciated. Parents took out equity release years ago of £40K. Dad died some years ago. Mum in her late 70's now has £100K on this as grown with c. 5.5% interest, yikes. Her place is probably worth £300K today. She wants to move somewhere smaller / easier to look after one day soon. In theory if she bought somewhere for £180-200K, could she could then clear most/all of this release loan after any settlement and moving fees. Or if she went somewhere that was a bit less and couldn't clear it all, can I take on any remaining debt via either a loan/short mortgage, let her live there but all in my name etc? Some of these over 55 places she's looked at say you can't move with this kind of loan hanging over.

    She could just stay put I know but she could well go on for another 20 years, her mother did, and I know all value would go as the loan grows. So overall, looking at a way of helping her move one day, but also protecting any potential inheritance, never expected anything but would rather any value stays for me and my kids rather than disappearing into some equity loan company. Any tips/advice? Cheers
    • hj711
    • By hj711 28th May 19, 5:16 PM
    • 61 Posts
    • 39 Thanks
    hj711
    We took out equity release 10 years ago so that we could help our sons get onto the housing ladder rather than pay high rents - we were simply bringing forward the legacies they would inherit eventually. That first deal was expensive (6.6%). so last year we paid it off and moved to Nationwide (via Age Solutions) at 3.5%, and there were no extras except £700 legal fees - Nationwide paid Age Solutions and the surveyor who valued our house. Now our house is increasing in value faster than the Equity release, and we are well pleased.
    Originally posted by Alotbsol
    Thank you that has helped my conundrum. I need to release equity in order to keep my head above water. My children will still inherit something out of my house in years to come assuming property increases and as I keep thinking to myself about doing this, I am coming to the realisation that I need to live now not worry about what my kids are going to inherit in 20 years time or whenever I pop my clogs. It is an option I have that I can consider, if I had been renting for years paying dead money I would not have that option... I feel easier having read your post...I feel a lot less panicky than when I first started reading threads here. My children are both accepting of the fact that there may not be as much left in the pot at the end but both are of the opinion that my sense of well being and security is what matters now not what they will get out of it. They will in fact benefit along the way as I will be able to help out a bit more with their load. school fees for grandchildren, school trips etc... gosh I may even be able to have amother holiday. Not had one for 7 years last year and the plastic is paying for that still!
    Last edited by hj711; 12-07-2019 at 12:32 PM. Reason: left out a word that changed the concept
    • Sea Shell
    • By Sea Shell 28th May 19, 5:28 PM
    • 2,242 Posts
    • 3,889 Thanks
    Sea Shell
    Good for you hj711. More people need to take a leaf out of your book and live their lives for themselves, rather than constantly worrying about leaving a substantial inheritance.
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow " JOB DONE!!
    This should now read "It's time to start digging up those Squirrelled Nuts"!!!
    • TELLIT01
    • By TELLIT01 11th Jul 19, 7:12 PM
    • 6,791 Posts
    • 7,447 Thanks
    TELLIT01
    My wife will retire in 3 years time and I will then be 71. We have no children, and it seems to make sense to release some of the equity in our property which is currently worth around £280k.
    We're happy for my wife's sister and her family to benefit from anything left when we finally pop our clogs, but certainly don't plan to go without in order for them to benefit.
    What alternatives to lifetime mortgages and similar could we consider, or is equity release a good option for us? There is no point in looking at downsizing as 2 bedroom bungalows are nearly as much as our 3 bed semi in our area.
    • hj711
    • By hj711 12th Jul 19, 12:16 PM
    • 61 Posts
    • 39 Thanks
    hj711
    Not sure if it's worth it, any pointers appreciated. Parents took out equity release years ago of £40K. Dad died some years ago. Mum in her late 70's now has £100K on this as grown with c. 5.5% interest, yikes. Her place is probably worth £300K today. She wants to move somewhere smaller / easier to look after one day soon. In theory if she bought somewhere for £180-200K, could she could then clear most/all of this release loan after any settlement and moving fees. Or if she went somewhere that was a bit less and couldn't clear it all, can I take on any remaining debt via either a loan/short mortgage, let her live there but all in my name etc? Some of these over 55 places she's looked at say you can't move with this kind of loan hanging over.

    She could just stay put I know but she could well go on for another 20 years, her mother did, and I know all value would go as the loan grows. So overall, looking at a way of helping her move one day, but also protecting any potential inheritance, never expected anything but would rather any value stays for me and my kids rather than disappearing into some equity loan company. Any tips/advice? Cheers
    Originally posted by avonstour
    Hi ya

    Sorry just read this although it's a couple of months old... since then though I have had 2 meetings with 2 different ER financial advisers so feel a bit more further forward than I was 2 months ago. Your mum could possibly port the loan to another property.. as long as it is of a value that they feel they can benefit from.. otherwise they would ask that she pays some of the loan off out of her sale but it would mean that the downsize could be a nicer property than she may find if she does not do this. As you have already found they won't do this on retirement properties though so keep that in mind. I don't know where you live but there are some very nice flats around where I am for instance that I will probably downsize to at some point in my equity release future.

    Also if she decides to pay off the loan they can charge an early redemption fee which can be as much as 25%.. ouch! But if say she was found to move in with family because it was felt she could not live independently any longer, then they will not charge a fee as this constitutes care. If you have any other questions let me know.. I may be able to help.. I am more than likely going to do this.. if I don't I am going to run out of money to pay my bills in the next 4 months! Not like I have much choice.. been sitting on the fence of this dilemma for too long and it has crept up on me! Ugh

    Good luck
    • hj711
    • By hj711 12th Jul 19, 12:29 PM
    • 61 Posts
    • 39 Thanks
    hj711
    My wife will retire in 3 years time and I will then be 71. We have no children, and it seems to make sense to release some of the equity in our property which is currently worth around £280k.
    We're happy for my wife's sister and her family to benefit from anything left when we finally pop our clogs, but certainly don't plan to go without in order for them to benefit.
    What alternatives to lifetime mortgages and similar could we consider, or is equity release a good option for us? There is no point in looking at downsizing as 2 bedroom bungalows are nearly as much as our 3 bed semi in our area.
    Originally posted by TELLIT01
    Hi there.. I have children and grandchildren but still I am considering this equity release as I am faced with the same dilemma concerning cost of bungalows. If your property is suitable for this.. they will allow UP TO a third of your property's value by the way.. my house is worth about £330k but the amount one adviser offered is £87k .. that is not going to last me 20 years (assuming I live to mid 80's) but you can port it to downsize or upsize believe it or not.. that really surprised me.. so for instance if you wanted a bungalow that was about the same price as your house, you could move your plan across to let it run on the bungalow provided it fitted their criteria etc.

    As you have no immediate family to leave it to, what is the point in sitting on your 'wealth'.. My children who are in their 30's are both very keen for me to do this.. they know it will affect what they get but as they both said.. it is not their god given right to expect to benefit and why should I be deprived of holidays and special treats in order for them to inherit... it makes no sense to them .. and to me.. I had a holiday last year which I am still paying for on my credit card.. think of the interest I will be paying if I don't clear it off in time before the interest free period ends.. that was my first holiday for 7 years! So for me it could relieve a lot of stress..

    For those who do have family they want to leave money to, you can ring fence a certain amount.

    They cannot take more than your house is worth from you, they are heavily regulated companies now.. I don't know where you are but I can tell you a name of someone I met yesterday and whom I found to be excellent.. her own mother took one out after her husband died so that she could move to a more suitable property for herself.. she would not have recommended that to her own mother if she was at all worried about these plans.

    There are different types of plans available also so you will be able to find one that suits you best.. for me it is the Lifetime Mortgage type.. and you can pay some of it off as you go so that you are reducing the overall debt.. if you want to but not if you can't.. i won't be able to unless some rich old uncle comes out of the woodwork with an inheritance.. ;-) You only pay interest on what you take out.. so be sensible if you do want to leave some behind and if you don't spend it and enjoy your life.. we only have one chance at this life!
    • TELLIT01
    • By TELLIT01 12th Jul 19, 5:48 PM
    • 6,791 Posts
    • 7,447 Thanks
    TELLIT01
    Hopefully we would be able to get by on our pensions, but who wants to 'get by' for the next umpteen years? Releasing equity would enable us to continue having decent holidays, replace the car as and when it's necessary, etc.
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