Anyone done equity release?

[DSLiverpool]

I’ve decided we don’t want to move and I’m exploring options.

I’m 59 the wife 58, personally I’m the oldest living male in 3 generations so it’s going well!!

My kids are separately ok - they don’t need the house but I’ve 100% equity and I’d like to piss it up the wall a bit (joke)

I know I’m young for this but I’m interested to hear of experiences.

[dalenorth]

It is expensive and there might be other options that are more suitable, so I’d do your research first, but we work with the guys at Viva who are brilliant, so let me know if you want an intro.

[Happy Jim]

I can’t help but think that this will be one of the next big mis-selling scandals at some stage in the future - but I can see the logic of pulling equity out of a house to enjoy life as well!

[Mr Whippy]

Reversion to the mean. You’ll live to 100.

Plus if you’re “young” won’t the costs be really high? Ie, giving up a lot of equity for not much?

[Simpo Two]

Now here's a thought. Release equity, then use it to buy shares in equity release companies. Will you get richer or poorer I wonder?

[mike9009]

Isn't it better to downsize if feasible??

[DSLiverpool]

mike9009 said:

Isn't it better to downsize if feasible??

We don’t really want to move but that is / was the plan

[Wacky Racer]

Wouldn't touch it with a bargepole.

Certainly not at such a young age.

I agree if you are seventy, with a house worth £600,000, cash poor (Maybe just on the basic state pension) with no children it may make sense, but I would prefer to downsize and live off the difference,

If you do decide, go over the contact with a fine toothcomb ten times, then at least you only have yourself to blame.

[caziques]

Don't forget...a 7% rate of interest doubles a debt in ten years.

Borrow 100,000 pounds at 7%, at year ten you owe 200,000, at year 20, 400,000. At year 30 800,000.

Even a 5% rate of interest doubles things every 15 years.

[PositronicRay]

DSLiverpool said:

We don’t really want to move but that is / was the plan

As you age, ill health, you could become stuck with a millstone too.

[DSLiverpool]

PositronicRay said:

DSLiverpool said:

We don’t really want to move but that is / was the plan

As you age, ill health, you could become stuck with a millstone too.

By Moving? We don’t want to move but I am conscious that I’ll be leaving people money to piss up the wall I’d quite like to piss up myself.

This is the issue when you don’t have a defined timescale of life - god failed on this one.

[JQ]

DSLiverpool said:

PositronicRay said:

DSLiverpool said:

We don’t really want to move but that is / was the plan

As you age, ill health, you could become stuck with a millstone too.

By Moving? We don’t want to move but I am conscious that I’ll be leaving people money to piss up the wall I’d quite like to piss up myself.

This is the issue when you don’t have a defined timescale of life - god failed on this one.

What happens in 15 / 20 years time when you want to move to a bungalow or supported living accommodation but are living in a house with a huge debt attached to it.

[DSLiverpool]

JQ said:

What happens in 15 / 20 years time when you want to move to a bungalow or supported living accommodation but are living in a house with a huge debt attached to it.

Well I’m No expert hence me asking but let’s say it’s worth £100k the max they lend you is under 50% I actually only want 25% of its current value at this stage.

[PositronicRay]

JQ said:

DSLiverpool said:

PositronicRay said:

DSLiverpool said:

We don’t really want to move but that is / was the plan

As you age, ill health, you could become stuck with a millstone too.

By Moving? We don’t want to move but I am conscious that I’ll be leaving people money to piss up the wall I’d quite like to piss up myself.

This is the issue when you don’t have a defined timescale of life - god failed on this one.

What happens in 15 / 20 years time when you want to move to a bungalow or supported living accommodation but are living in a house with a huge debt attached to it.

Nothing stays the same, one of my friends was widowed. Although she loved the house and area it was a big costly, uncompromising place. She sold up and bought a flat nearer to her son.

My mum sold her bungalow and moved to a residential care home in her village. Her decision she no longer could or wanted to manage on her own.

A friend in the village who's helped fund a suitable house with annex, she now lives with her daughter and son in law.

Very difficult to see what's around the corner.

The chances are ones wife will be the one holding the baby so to speak.

[jfdi]

DSLiverpool said:

Well I’m No expert hence me asking but let’s say it’s worth £100k the max they lend you is under 50% I actually only want 25% of its current value at this stage.

At 59 years old I'd be very surprised if they would give you anywhere near 25% of the house value. They could be waiting 30 years for their money back out by which time the the amount owed could be beyond the value of the property.

[joropug]

My grandfather (father of 3) did this, married and joint product but my grandmother just did whatever he said finance wise.

They took out 60k of a then 350k house - did bathrooms and kitchens that didn’t need doing, new carpets etc. not sure what they did with the rest. I should add his pension was mega and could have easily found other finance means but for whatever reason didn’t.

Couple of years later grandfather is in a home with dementia (suspect he had it when he took out the product too) grandmother is living in a lovely house by herself that is every month depreciating in value (equity).

She had to try and sell the house to protect at least some of her inheritance to her children and it was a race against them to be able to sell it whilst it still had equity and buy somewhere with the difference.

In short those bathrooms and kitchens, in a house she no longer owns, probably cost her £250k in lost value, lost growth on the property which is worth loads more now and all the other stuff she has had to do in her new home which was of a much lower quality than she was used to living in her whole life.

Yes she could have stayed in the house longer but understandably she didn’t want to give everything they had worked for their whole life to company rather than her children.

If you have no partner or no children I can see the appeal but I am vehemently against these products as I saw first hand how it completely ripped money out of my family members hands.

[Mr Pointy]

DSLiverpool said:

JQ said:

What happens in 15 / 20 years time when you want to move to a bungalow or supported living accommodation but are living in a house with a huge debt attached to it.

Well I’m No expert hence me asking but let’s say it’s worth £100k the max they lend you is under 50% I actually only want 25% of its current value at this stage.

Sell 25% to the kids - tell them if they want to inherit you need an advance.

[richardxjr]

Take out an IO mortgage instead? Probably half the interest rate. Pay that off in future by either downsizing or equity release. The older you are when taking ER out, the better the deal and % available.

ER has some big positives imho including the flexibility to pay the interest or even some capital voluntarily. I just think the rates will be sky high at present; last year at 4% was a different proposition to today's likely 7 or 8% (guess)

[Sheepshanks]

Mr Pointy said:

DSLiverpool said:

JQ said:

What happens in 15 / 20 years time when you want to move to a bungalow or supported living accommodation but are living in a house with a huge debt attached to it.

Well I’m No expert hence me asking but let’s say it’s worth £100k the max they lend you is under 50% I actually only want 25% of its current value at this stage.

Sell 25% to the kids - tell them if they want to inherit you need an advance.

FIL was on a chunky final salary pension but always lived life to the full so didn't have much cash behind him - he didn't need it, as new money came in every month.

He did equity release on his house with a scheme that gave him 25% in cash in return for giving up 50% of value. This is 20+ years ago and approx £400K house value.

Then MIL developed cancer and died. The house had a complicated garden which was very much hers and he didn't want to stay there.

He wanted to move/down size to £275K house but half the value didn't give him enough so his three kids (which of course, for his daughter, means me) took an IO mortgage to cover the difference.. We all had 25% ownership of the house. He gave us all a cheque every Christmas to cover the interest. We got the principal back to repay the loan when he died and the house was sold.

As per the above post, it would have been better to have given him £100K directly, but I doubt my BILs would have wanted to do that, despite both being very comfortably off. It was never discussed anyway.

[jeff m]

Equity release is a bit drastic, initial costs too.

Why not just get a line of credit based on the value of your house. Maybe 50%. You only pay interest on the amount you draw, and you can pay it back if you wish. It does require a small Monthly min payment, but a simple bit of arithmetic can take care of that.

I've had one for years, great for a hiccup in the cash flow. Currently untapped, costs me nothing, but there if I need it.