Equity release, would you ?
Discussion
No mortgage at present . house worth in excess 500k , can’t retire even though past retirement age.
State pension and Civil Service pension are good , just not good enough to give the comfortable life style , we have at present and we prefer not to cut back , OH caught in rise by rise of retirement age for female’s , so another 3 years for her at work , in order to qualify for full state pension
So would you cash in some of the value of your pile , as opposed to the “must leave something to kids “ mentality ?
Wife isn't caught in the rise in retirement age she is just suffering the benefits of feminists wanting equality 
The more money you release generally the higher the interest rate they charge you.
So what I would be looking for is an interest rate below the expected house price rise so you protect your capital
You may find with that you cannot release the amount you want to fund a good life style for long.
The more money you release generally the higher the interest rate they charge you.
So what I would be looking for is an interest rate below the expected house price rise so you protect your capital
You may find with that you cannot release the amount you want to fund a good life style for long.
Depends entirely on your delta between the lifestyle you want and what you can afford. You will get nothing like the value of your house through equity release, which is reasonable because they are signing up to a very open ended proposition.
If your gap is say 40k a year, then the value of the house will be gone in 5 years. Then you’re utterly stuffed - a house that you can’t afford, and don’t own. If your gap is 5k a year, then the numbers are a bit more sensible.
Personally, I’d spend a bit less.
If your gap is say 40k a year, then the value of the house will be gone in 5 years. Then you’re utterly stuffed - a house that you can’t afford, and don’t own. If your gap is 5k a year, then the numbers are a bit more sensible.
Personally, I’d spend a bit less.
MXRod said:
2 now Adults 30s and 40s
Prefer not to downsize , room on drive for 2 cars and caravan , and still room for visitors , nearly 40 years of getting the house just as we want it
Spin it round a little.Prefer not to downsize , room on drive for 2 cars and caravan , and still room for visitors , nearly 40 years of getting the house just as we want it
You've got half a mill in the bank and no home. Would you decide to spend all that half mill on a lovely house?
I appreciate there will be an emotional attachment too, but a move to somewhere else, put a new stamp on it, do some gardening, and have 200k in the bank...?
I wonder if your maths is perhaps not correct when working out your budget? Have you factored in things like not having to commute and the general cost of working i.e food, work clothes, going out / office parties etc etc?
If you have no mortgage and there are only 2 of you in the house then your monthly base line expenses should be pretty low.
I would do a detailed expense report tracking every penny you spend each day over a month.
If you have no mortgage and there are only 2 of you in the house then your monthly base line expenses should be pretty low.
I would do a detailed expense report tracking every penny you spend each day over a month.
I have a client who was going to do the same thing. Equity Release was only a short term fix and would only have papered over the cracks.. for a bit. His former daughter-in-law spends a lot of time in Scotland, away from her home in Sevenoaks. He lives near Lincoln. So she rents a spare room instead of hotelling it, when transiting.
https://www.gov.uk/rent-room-in-your-home/the-rent...
Edit - she drops off the children with Granddad so she’s not spending money on a childminder too. Essentially, she’s better off, the children have a link with him and everyone wins. It shows what can be achieved if you think alternatively.
https://www.gov.uk/rent-room-in-your-home/the-rent...
Edit - she drops off the children with Granddad so she’s not spending money on a childminder too. Essentially, she’s better off, the children have a link with him and everyone wins. It shows what can be achieved if you think alternatively.
Edited by Ginge R on Sunday 9th September 17:21
What about a different route
Why not sell a % of the house to your children you get the £ and clearly it would be a discounted rate so the kids “happy” too.
Also sounds like you have a caravan - how much do you or will you really use it? Lots of cash tied up in that vs renting somewhere when you want to go.
Why not sell a % of the house to your children you get the £ and clearly it would be a discounted rate so the kids “happy” too.
Also sounds like you have a caravan - how much do you or will you really use it? Lots of cash tied up in that vs renting somewhere when you want to go.
Welshbeef said:
What about a different route
Why not sell a % of the house to your children you get the £ and clearly it would be a discounted rate so the kids “happy” too.
Also sounds like you have a caravan - how much do you or will you really use it? Lots of cash tied up in that vs renting somewhere when you want to go.
There would be estate planning and other issues to address. They’re not insurmountable and they may not even apply, but as it now forms part of someone else’s assets, if one of the kids get divorced (for instance), you want to be sure the home doesn’t have to be sold to pay off a salivating ‘ex’. Why not sell a % of the house to your children you get the £ and clearly it would be a discounted rate so the kids “happy” too.
Also sounds like you have a caravan - how much do you or will you really use it? Lots of cash tied up in that vs renting somewhere when you want to go.
My parents went down the equity release route a dozen or so years ago. When dad died, mum decided to seel and move into a retirement apartment (another financially dumb move, but it's what she wanted). The £60k they borrowed to build an extension ended up costing £145k, and meant effectively swapping a 3 bed detached bungalow for a 1 bed apartment to clear the debt.
At the time they took out the mortgage, my brother and I were in the position to buy some of the equity in their house. They didn't tell us about it until it was a done deal, with a couple of year's interest added on.
Dad thought it was a safe bet, as he expected house prices to at least keep pace with the interest. They didn't, by quite a big margin.
At the time they took out the mortgage, my brother and I were in the position to buy some of the equity in their house. They didn't tell us about it until it was a done deal, with a couple of year's interest added on.
Dad thought it was a safe bet, as he expected house prices to at least keep pace with the interest. They didn't, by quite a big margin.
clockworks said:
My parents went down the equity release route a dozen or so years ago. When dad died, mum decided to seel and move into a retirement apartment (another financially dumb move, but it's what she wanted). The £60k they borrowed to build an extension ended up costing £145k, and meant effectively swapping a 3 bed detached bungalow for a 1 bed apartment to clear the debt.
At the time they took out the mortgage, my brother and I were in the position to buy some of the equity in their house. They didn't tell us about it until it was a done deal, with a couple of year's interest added on.
Dad thought it was a safe bet, as he expected house prices to at least keep pace with the interest. They didn't, by quite a big margin.
These days providers are keen to involve next-of-kin prior to accepting an application (where possible and with the consent of the applicant), to avoid this type of issue occurring some years later.At the time they took out the mortgage, my brother and I were in the position to buy some of the equity in their house. They didn't tell us about it until it was a done deal, with a couple of year's interest added on.
Dad thought it was a safe bet, as he expected house prices to at least keep pace with the interest. They didn't, by quite a big margin.
Interesting feedback
To cover some of the comments.
State pension equals tax allowance, so any other income is taxed at 20 pc
Civil service pension was built up over 18 years so not full final salary
As I am semi retired ,I work 4 days self employed, so I have factored in all costs related,
Living expenses are related to living in South London ,so council tax , insurances etc are all higher, and yes we do live the life with holidays we would not want to give up .
Family ties mean we don't wish to move away,
Otherwise a chateau in mid France in a blink of an eye.
To cover some of the comments.
State pension equals tax allowance, so any other income is taxed at 20 pc
Civil service pension was built up over 18 years so not full final salary
As I am semi retired ,I work 4 days self employed, so I have factored in all costs related,
Living expenses are related to living in South London ,so council tax , insurances etc are all higher, and yes we do live the life with holidays we would not want to give up .
Family ties mean we don't wish to move away,
Otherwise a chateau in mid France in a blink of an eye.
Please don’t take this the wrong way as I’m merely drilling down to the core issue which is that you have lived beyond your means during a long enough period of your working lives and due to opting to spend the funds which should have been saved to replicate a sufficient income in retirement on a higher standard of lifestyle you really face two options. The first is to cut your cloth to suit your true income or to carry on and push the consequences further down the road.
Luckily for the many who are in this situation we have had huge property inflation which means that kicking the can down the road seems a more sensible option as the extension such an approach gives has gone from a few years out to a decade or longer.
The latter approach of not dealing directly with the route cause today really boils down to being a random punt on how long you live, how much you care about leaving anything to your children, how much you care about leaving your wife protected and secure after you have gone or how soon you need to move into State financed accommodation etc etc.
The logical approach is to downsize to release sufficient funds to use over the next 20 or so years to bolster your pensions while trimming some of the excess expenditure.
Either route you head down you will be ensuring your children have little to no inheritance and as a parent it’s going to be important to sit down with them and check in close detail that they are not over spending with the expectation that your wealth will cover them as this is a somewhat important factor in what your final decision is.
The key factor to keep in mind is that equity release in this case is a bodge to allow you to keep everything for a little while longer.
There is another traditional alternative that gets overlooked these days and that is to generate yield from your property. There is a reason as to why boarding houses always used to be run by elderly widows. Re-arrange your home so that you can rent the excess rooms out for. It also sounds far more glamorous if you refer to this process as sweating your assets.
Luckily for the many who are in this situation we have had huge property inflation which means that kicking the can down the road seems a more sensible option as the extension such an approach gives has gone from a few years out to a decade or longer.
The latter approach of not dealing directly with the route cause today really boils down to being a random punt on how long you live, how much you care about leaving anything to your children, how much you care about leaving your wife protected and secure after you have gone or how soon you need to move into State financed accommodation etc etc.
The logical approach is to downsize to release sufficient funds to use over the next 20 or so years to bolster your pensions while trimming some of the excess expenditure.
Either route you head down you will be ensuring your children have little to no inheritance and as a parent it’s going to be important to sit down with them and check in close detail that they are not over spending with the expectation that your wealth will cover them as this is a somewhat important factor in what your final decision is.
The key factor to keep in mind is that equity release in this case is a bodge to allow you to keep everything for a little while longer.
There is another traditional alternative that gets overlooked these days and that is to generate yield from your property. There is a reason as to why boarding houses always used to be run by elderly widows. Re-arrange your home so that you can rent the excess rooms out for. It also sounds far more glamorous if you refer to this process as sweating your assets.
My in-laws did this for similar reasons to you. We told them to forget about inheritance and enjoy their remaining years. I’d like to think that any right thinking kids would say the same to their parents regardless of their situation.
However, I didn’t agree with their decision. I thought they should downsize but they would have lost the large garden, workshop and detatched bungalow that they love, even if they could have stayed in the same village.
Planning and maths is all important here. Like any large, long term financial commitment, it’s well worth knowing all the facts and possibilites before signing up so you make a fully informed decision. I would also make sure that you are maximising what you can get from a financial planning perspective.
Find out how much equity you will lose to compound interest over the years on the amount you will borrow. This will avoid nasty surprises in future finding out that you don’t even have the equity to move and/or downsize. That was my prime concern for the in-laws.
You could find yourself locked into your house, which is perfect for you now but it could become a millstone in future as you get older.
Will the house still be suitable if either of you gets ill / can’t work / goes into care / have reduced mobility? Simple things like gardening and walking up stairs will become difficult.
Bear in mind that any house improvements would benefit the mortgage company in terms of increasing the value of the house.
However, I didn’t agree with their decision. I thought they should downsize but they would have lost the large garden, workshop and detatched bungalow that they love, even if they could have stayed in the same village.
Planning and maths is all important here. Like any large, long term financial commitment, it’s well worth knowing all the facts and possibilites before signing up so you make a fully informed decision. I would also make sure that you are maximising what you can get from a financial planning perspective.
Find out how much equity you will lose to compound interest over the years on the amount you will borrow. This will avoid nasty surprises in future finding out that you don’t even have the equity to move and/or downsize. That was my prime concern for the in-laws.
You could find yourself locked into your house, which is perfect for you now but it could become a millstone in future as you get older.
Will the house still be suitable if either of you gets ill / can’t work / goes into care / have reduced mobility? Simple things like gardening and walking up stairs will become difficult.
Bear in mind that any house improvements would benefit the mortgage company in terms of increasing the value of the house.
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