How flexible can Equity Release be?

Sea_Shell · 16 October 2016 at 7:42AM

Not old enough just yet for this, but was wondering what is the most flexible solution on the market at the moment, and do you think there will be pressure in the future for even more flexible solutions to become available?

Does such a scheme exist where you can set up to release a relatively small monthly "income" rather than a lump sum, just to make up any shortfall between Pension/Saving income, and preferred income level.

e.g. you already have monthly income of say £1000 but you really fancy an extra £500-1000 for "a fun retirement" (no kids to worry about leaving anything to)

Also would a scheme like this (if it exists) allow you to make re-payments, if you did come into a bit of cash in the future??

I have had a bit of a Google, and not found much, but wondered if anyone had any personal experience.

If nothing like this currently exists, i'm hoping that it might in the future. I'm sure they'd be a market for it. Sort of a Secured Credit Card that you don't have to pay back!!

Cheers.

Thrugelmir · 16 October 2016 at 11:20AM

Be an expensive product to administer if it were available. Given the money is not repaid paying unnecessary fees. Would be detrimental to the outcome. Better to release a lump sum and use this to guarantee a regular income.

WillowCat · 16 October 2016 at 11:51AM

I have also been wondering about this. I don't see why it would be expensive to administer - something along the lines of an offset mortgage so although you would apply for a particular sum at the beginning, you would only take the amounts you want, and have the flexibility of repaying when you want.

Personally I would like the option to pay interest only rather than having interest roll up.

Perhaps also being able at intervals - say 3 or 5 years having the option of reviewing the maximum sum to take account of increasing age and/or property price movements.

I haven't found anything currently on the market either, hopefully by the time I would be looking at it (about 10 or 15 years away) something will be available.

Sea_Shell · 29 October 2016 at 6:47AM

Read this yesterday. This looks like what i was talking about.....

http://www.dailymail.co.uk/money/mortgageshome/article-3867502/A-mortgage-pays-month-New-retirement-booster-mortgage.html

Hopefully the link will work??

AnotherJoe · 29 October 2016 at 8:59AM

I can foresee in ten years time a set of posts from people saying things like "evil FBS wants to evict my mum and dad" or "why can't I extend my FBS mortgage, they lied to me that I could live in my home" from people who, whatever you tell them, and whatever they say, don't really understand what this means.

EDIT And as if to prove my point listen to the clip referred to in this post about IO mortgages where despite the need to repay in full being marked in bold letters in the second line of the acceptance letter and then the radio interviewer explaining it, the person still doesn't take it on board.

I'm not saying this scheme is a bad thing per se, but if you are that short on money (it is a maximum of only £400 a month you get paid so it's not a road to riches) , why not downsize upfront and get yourself into a stable position going forward without a ten year timer starting and having a forced date with no flexibility about when you need to move?

I guess one exception might be, that with very high certainty you expect a payout within the time period of the loan, that will enable you to repay it. And are prepared to accept the consequences if that doesn't happen.

Thrugelmir · 29 October 2016 at 11:17AM

WillowCat wrote: »

I have also been wondering about this. I don't see why it would be expensive to administer - something along the lines of an offset mortgage so although you would apply for a particular sum at the beginning, you would only take the amounts you want, and have the flexibility of repaying when you want.

How would the money be withdrawn. What would the minimum sum be. Would it involve a phone call to a call centre. Would you expect the call centre to operate a 24/7 service. How quickly would you expect to receive the money.

Has does the repayment process work. Again a phone call. Or ad hoc payments via ones own bank account.

Would you expect monthly account statements in order that you could keep track of the balance.

silvercar · 29 October 2016 at 12:06PM

AnotherJoe wrote: »

I can foresee in ten years time a set of posts from people saying things like "evil FBS wants to evict my mum and dad" or "why can't I extend my FBS mortgage, they lied to me that I could live in my home" from people who, whatever you tell them, and whatever they say, don't really understand what this means.

I'm not saying it's a bad thing per se, but if you are that short on money (it is a maximum of £400 a month you get paid so it's not a road to riches) , why not downsize upfront and get yourself into a stable position going forward without a ten year timer starting and having a forced date with no flexibilty about when you need to move?

I guess one exception might be, that with very high certainty you expect a payout within the time period of the loan, that will enable you to repay it. And are prepared to accept the consequences if that doesn't happen.

Friends are looking into this. Not quite ready to downsize as they have adult children living at home, but in 10 years or less they will move.

Another reason may be an elderly relative lurking in the background - the consequence of people living longer.

AnotherJoe · 30 October 2016 at 10:55AM

silvercar wrote: »

Friends are looking into this. Not quite ready to downsize as they have adult children living at home, but in 10 years or less they will move.

Another reason may be an elderly relative lurking in the background - the consequence of people living longer.

But you can never count on an inheritance 100% (unless you are the future Duke of Westminster I suppose). There's bound to be someone who expected mums inheritance to pay for their needs and then it turns out mum didn't actually own the house, or left it to the local cats home, or she lived well beyond her expected years and the payment deadline, or needed to sell her house to pay for care, etc etc.

So, as long as you are prepared to accept the consequences of the money not coming through then maybe its a temporary solution, but as I said, at £400/month maximum you must be close to the breadline for this to make a difference.

silvercar · 30 October 2016 at 11:08AM

AnotherJoe wrote: »

But you can never count on an inheritance 100% (unless you are the future Duke of Westminster I suppose). There's bound to be someone who expected mums inheritance to pay for their needs and then it turns out mum didn't actually own the house, or left it to the local cats home, or she lived well beyond her expected years and the payment deadline, or needed to sell her house to pay for care, etc etc.

So, as long as you are prepared to accept the consequences of the money not coming through then maybe its a temporary solution, but as I said, at £400/month maximum you must be close to the breadline for this to make a difference.

Not disagreeing with you, but it does buy you time. If your house is full of offspring in their early twenties, time may be all you need.

How flexible can Equity Release be?

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