Release of Collateral

sircodders · 7 April 2018 at 7:26AM

Hello

Myself and my wife are both in our mid 40's and we own our £550,000 property outright.

Despite being asset rich we are cash poor. Apart from getting a mortgage is there any way of releasing cash from the property?

ctdctd · 7 April 2018 at 8:22AM

Would rent a room be an option?

AnotherJoe · 7 April 2018 at 8:24AM

Not really. There is equity release, which you've heard of no doubt, but it is really just an (expensive) interest only mortgage under a different name. And in your mid 40's you most likely arent eligible in any case.
I take it you've ruled out downsizing?
In any case, either option would likely only be kicking the can down the road, when the money runs out you'll be back at square one, which means looking at the fundamentals of earning more and spending less, for which you have plenty of time.

sircodders · 7 April 2018 at 8:31AM

If we had a spare room it would be an option, but two small children are filling the rooms!

I did see something about equity release but you have to be over 55 to qualify. We are basically looking for someone to invest in our property, if that makes sense. Apart from a mortgage/loan are there any other options?

sircodders · 7 April 2018 at 8:34AM

AnotherJoe our posts crossed! Thank you.

Glen_Clark · 7 April 2018 at 9:56AM

sircodders wrote: »

We are basically looking for someone to invest in our property, if that makes sense.?

Frankly, no.
How long would an investor have to wait for your property?
Would they have to evict your children?
What state would it be in then?
etc
Not a great investment is it?

eskbanker · 7 April 2018 at 10:19AM

sircodders wrote: »

We are basically looking for someone to invest in our property, if that makes sense. Apart from a mortgage/loan are there any other options?

Surely a mortgage is exactly what you're looking for, i.e. someone investing in your property by offering you a repayable loan secured on it? How would you see an alternative form of investment working any differently and/or why do you not see the mortgage as the most appropriate route?

Linton · 7 April 2018 at 11:30AM

Why would anyone want to simply invest in your house? They dont know when they may get their investment back. They dont know what the rate of return would be. They do know that they wont get anything until you die or sell the house in possibly 50 years time. It doesnt seem like an enticing investment to me.

A loan of some form, and the cheapest form is probably a mortgage, is the only way I can see of providing someone with enough protection for their assets to give you the money at a reasonable cost.

sircodders · 8 April 2018 at 7:45AM

Thanks for the all the comments. We've been mortgage free for 15 years now so unless desperate we don't really want to go down that route. I think our only option is to look elsewhere for a cheaper property. Thanks again.

Sea_Shell · 8 April 2018 at 7:51AM

sircodders wrote: »

Thanks for the all the comments. We've been mortgage free for 15 years now so unless desperate we don't really want to go down that route. I think our only option is to look elsewhere for a cheaper property. Thanks again.

But just think of all the extra costs involved in moving, fees, stamp duty etc. Maybe a mortgage IS the most reasonable, and cost effective way of releasing some cash, assuming you can afford the monthly payments and would like to stay in your current house.

Please don't write it off as a non-starter, just because you like being mortgage-free.

AnotherJoe · 8 April 2018 at 8:36AM

So once you've got a cheaper property, what's the plan? The money you released will be gone eventually, your living costs won't change substantially by downsizing, so as I said earlier you are kicking the can down the road and missing the fundamentals.

I would also presume your pensions aren't in good shape either if you have no spare cash to get by ?

Release of Collateral

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