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  • FIRST POST
    • mamabuddah
    • By mamabuddah 14th Feb 18, 1:23 PM
    • 678Posts
    • 1,464Thanks
    mamabuddah
    Releasing Equity...think thatís what itís called..
    • #1
    • 14th Feb 18, 1:23 PM
    Releasing Equity...think thatís what itís called.. 14th Feb 18 at 1:23 PM
    If listed in the wrong forum, can a mod please shift?

    We donít have a mortgage on our home, almost 10 years mortgage free, DD is trying to get on the property market, she has just started her new career and is in a good job with promotion opportunities and a clear salary progression scale. I know not many jobs are for life, but this is as close as youíll get.

    She has been renting for the last 8 years and feels itís throwing good money after bad. She has a help to buy ISA which is growing at a good rate...but will still be short of what she needs.

    Iím on a great pension, OH has a P/T job and will have state pension in less than 18 months.

    Weíd like now to help her with about £10k, if feasible, but weíre not sure of options to raise this and gift it to her...she said she will pay us back, but thatís not of any concern, weíre happy to just give her the money.

    Does this make sense? Whatís the best way to do this?

    Thanks.
    No two ways about this one: Anything Free is not a Basic Right..it had to be earned...by someone, somewhere
Page 1
    • Lokolo
    • By Lokolo 14th Feb 18, 1:26 PM
    • 19,991 Posts
    • 15,120 Thanks
    Lokolo
    • #2
    • 14th Feb 18, 1:26 PM
    • #2
    • 14th Feb 18, 1:26 PM
    You both are pension age. Have you taken the 25% tax free part of your private pensions? If not this might be an option. Obviously this depends on your pension you have.

    You haven't actually said how much your property is worth - most mortgages require a minimum £25k though. And you haven't said what your incomes are.
    • mamabuddah
    • By mamabuddah 14th Feb 18, 1:32 PM
    • 678 Posts
    • 1,464 Thanks
    mamabuddah
    • #3
    • 14th Feb 18, 1:32 PM
    • #3
    • 14th Feb 18, 1:32 PM
    You both are pension age. Have you taken the 25% tax free part of your private pensions? If not this might be an option. Obviously this depends on your pension you have.

    You haven't actually said how much your property is worth - most mortgages require a minimum £25k though. And you haven't said what your incomes are.
    Originally posted by Lokolo
    Iím 62, (male) currently on Iíll health retirement pension £17.5k
    OH p/t (female) £8k age 64 (SP in 18 months)
    Home value approx £140k
    No two ways about this one: Anything Free is not a Basic Right..it had to be earned...by someone, somewhere
    • ReadingTim
    • By ReadingTim 14th Feb 18, 1:39 PM
    • 2,733 Posts
    • 3,909 Thanks
    ReadingTim
    • #4
    • 14th Feb 18, 1:39 PM
    • #4
    • 14th Feb 18, 1:39 PM
    Easiest option would be to dip into your savings/investments. Don't be tempted to raid your pension pot without advice on the tax implications.

    If you want to release some equity from your house, you'll need to take out another mortgage on it. Which you'll have to pay back. £10k is probably too small a sum for a mortgage, so you may want to investigate a secured loan instead. However, assuming your loan application was successful, this will also need to be repaid by you.

    The only way you don't pay anything back would be to sell your current house and buy a cheaper one with the proceeds. The difference between the purchase price of the new one and the selling price of the old one is given to your daughter.
    • 00ec25
    • By 00ec25 14th Feb 18, 2:16 PM
    • 6,509 Posts
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    00ec25
    • #5
    • 14th Feb 18, 2:16 PM
    • #5
    • 14th Feb 18, 2:16 PM
    your options include:

    1. DO NOT do this one - "equity release" you sign up to a company who gives you a lump sum of money in exchange for taking a debt secured on your property. Typically there are no repayments made against the debt but when you die the company gets first dibs at the money raised from selling the house. That means by then they may well take every penny raised as not only will your estate have to repay the original loan but also years of unpaid interest that was added to it.. Don't do it !!!

    2. "release equity" you have a mortgage free house. You could go back to having a mortgage and having to repay it each month by borrowing a sum of money as a release of equity. As other have said 10k is less than most lenders will give on a mortgage so unless you want to borrow more (the 25k mentioned) you would not be able to do this anyway

    3. take out a personal loan secured against the house. The interest rate will be higher than a mortgage and the repayment period very much shorter but for "only" 10k that should be a very normal sort of loan for many lenders. Your problem will be can you afford the repayments every month given your low income - try getting some quotes from your bank and other lenders

    4. spend your savings - if you have any!

    5. take from your pensions - we don't know if you can ?
    • Cakeguts
    • By Cakeguts 14th Feb 18, 4:44 PM
    • 4,416 Posts
    • 6,351 Thanks
    Cakeguts
    • #6
    • 14th Feb 18, 4:44 PM
    • #6
    • 14th Feb 18, 4:44 PM
    What on earth is the rush? If daughter now has a good job why can't it wait until she has saved enough for a deposit. If you provide the money for the deposit now your daughter can only buy something that your deposit can afford. If she saves with the new job she might be able to get something better?
    • ReadingTim
    • By ReadingTim 14th Feb 18, 5:22 PM
    • 2,733 Posts
    • 3,909 Thanks
    ReadingTim
    • #7
    • 14th Feb 18, 5:22 PM
    • #7
    • 14th Feb 18, 5:22 PM
    What on earth is the rush? If daughter now has a good job why can't it wait until she has saved enough for a deposit. If you provide the money for the deposit now your daughter can only buy something that your deposit can afford. If she saves with the new job she might be able to get something better?
    Originally posted by Cakeguts
    The daughter is already saving (read the bit about the help to buy ISA...) - the issue will be that prices may be rising faster than she's saving, which is understandable given she's also paying rent.

    A £10k headstart now may mean she can buy something which would be unaffordable by the time she's saved up that money by herself...
    • Cakeguts
    • By Cakeguts 14th Feb 18, 5:43 PM
    • 4,416 Posts
    • 6,351 Thanks
    Cakeguts
    • #8
    • 14th Feb 18, 5:43 PM
    • #8
    • 14th Feb 18, 5:43 PM
    The daughter is already saving (read the bit about the help to buy ISA...) - the issue will be that prices may be rising faster than she's saving, which is understandable given she's also paying rent.

    A £10k headstart now may mean she can buy something which would be unaffordable by the time she's saved up that money by herself...
    Originally posted by ReadingTim
    You are making an assumption based on no evidence that prices will be rising fast. They don't do that in all areas of the country.
    • ReadingTim
    • By ReadingTim 14th Feb 18, 6:00 PM
    • 2,733 Posts
    • 3,909 Thanks
    ReadingTim
    • #9
    • 14th Feb 18, 6:00 PM
    • #9
    • 14th Feb 18, 6:00 PM
    You are making an assumption based on no evidence that prices will be rising fast. They don't do that in all areas of the country.
    Originally posted by Cakeguts
    Again you have misread, or simply not read parts of a post. Please refer to my use of the word "may".

    And do pay attention.
    • a_silver_lining
    • By a_silver_lining 14th Feb 18, 6:52 PM
    • 227 Posts
    • 679 Thanks
    a_silver_lining
    You currently have a good pension (well, as much as my salary!) and no mortgage. Could you pull in the purse strings and save for a year and a half to gift her the money? 10k = £555pm out of I!!!8217;m guessing around £1100pm, plus your other half!!!8217;s wage would leave you extra spending money. I have a mortgage and save £550pm so certainly doable with really tight budgeting and little luxuries for the short term. But worth it to not take on more debt?
    19/12/14: Spent 10 years of savings!!
    ..... to buy my first home.

    2018: 1500 savings --- Family Loan (3250 direct + 2000 saver) 5250/10K paid 52.5%
    #38 1% Challenge: £514.70/ £2018, now at 25%!
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