Paying off mortgage with equity release.
Discussion
I don't think it's for you. Have a look at this link
http://www.thisismoney.co.uk/money/mortgageshome/a...
http://www.thisismoney.co.uk/money/mortgageshome/a...
TonyRPH said:
How much equity does one need in a mortgage to pay it off with equity release?
I've only just discovered this option - however I am next to useless with financial matters at this level (as is Mrs RPH).
Can anybody offer some - simple - advice please?
Thanks.
Is full ownership the target? if so, this is not for you.I've only just discovered this option - however I am next to useless with financial matters at this level (as is Mrs RPH).
Can anybody offer some - simple - advice please?
Thanks.
Say you have 75% equity in the house. You could use equity release to get enough money to pay off the remaining 25%, but then you would have just taken out a mortgage with the equity release company on 25% of the house - you are back where you started in terms of ownership.
The difference with equity release is that you don't have to pay the equity release company any money...while you're alive. As soon as you die (or go to a care home) they'll want their money back, and their interest rate will be higher than the current mortgage rate you have meaning that your relatives will have less of an inheritance to bicker over.
Perhaps veering slightly off-topic, but I wonder if the following plan has legs, for a couple with no dependents and no desire to leave this earth with anything in our pockets...
Assuming a fully paid-for home, rather than surrender to the equity release vultures, would it be possible to sell one's home at a below-market price to a landlord, with a lifetime tenancy agreement in place, enabling the couple to continue to reside in their own home and, hopefully, have some cash left over to boost the pension each month? Obviously, there would need to be legally water-tight agreements drawn up, but as an example:
Open-market valuation of house: £500k
Agreed sale price: £400k
Monthly rent till death (rising by CPI/RPI/something): £1250
I realise that the above figures give a very low yield, but are fairly typical around these parts at present. For the investor, there is a guaranteed rental income, also a certain reassurance that the property is likely to be kept in good order, and an immediate capital gain upon the death of the residents (assuming no property market crash and a desire to sell the asset).
Or am I missing something?
Assuming a fully paid-for home, rather than surrender to the equity release vultures, would it be possible to sell one's home at a below-market price to a landlord, with a lifetime tenancy agreement in place, enabling the couple to continue to reside in their own home and, hopefully, have some cash left over to boost the pension each month? Obviously, there would need to be legally water-tight agreements drawn up, but as an example:
Open-market valuation of house: £500k
Agreed sale price: £400k
Monthly rent till death (rising by CPI/RPI/something): £1250
I realise that the above figures give a very low yield, but are fairly typical around these parts at present. For the investor, there is a guaranteed rental income, also a certain reassurance that the property is likely to be kept in good order, and an immediate capital gain upon the death of the residents (assuming no property market crash and a desire to sell the asset).
Or am I missing something?
Mattt said:
France has a similar scheme
https://en.wikipedia.org/wiki/Jeanne_Calment#Perso...Her deal was the owner-to-be paying the person an income until whenever they die - obviously that chap picked the wrong person!
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