Equity release.
Discussion
A topic generated through an ad on here and also because my FIL is going into a home and his house will probably need to be sold.
If you take some equity out of your house using one of the well known companies where do you stand if you need to go into a home?
Will the house still be sold and the equity company just gets it's percentage?
It's normally a life time mortgage so you pay interest on the amount of equity released from year 1 and on the new accumulated amount which includes the previous years interest from year 2. This can build up very quickly and is paid back on death from the estate.
For example, if release £50k equity at 3.5%, after 10 years you will have to pay back just over £70k, and nearly £100k after 20 years. As you get older and the amount of interest adds up you will be wanting to die
If you go through a broker rather than direct to the mortgage co you will also pay a commission to the broker, something up to 2.2% of the amount released.
They are not the attractive proposition they first appear to be, the devil is in the detail.
For example, if release £50k equity at 3.5%, after 10 years you will have to pay back just over £70k, and nearly £100k after 20 years. As you get older and the amount of interest adds up you will be wanting to die
If you go through a broker rather than direct to the mortgage co you will also pay a commission to the broker, something up to 2.2% of the amount released.
They are not the attractive proposition they first appear to be, the devil is in the detail.
Edited by Monkeylegend on Friday 4th August 17:07
I run a website for a retired section of the community. For an article on equity release I asked various companies to sent me literature. What I got from it was confusing to an extent so might I suggest going onto the company's website and checking through their FAQs.
There are different types of 'equity release', so I'd suggest looking through the contract. They don't only vary in detail, but in obligations as well.
The person taking out the contract will, almost certainly, have a right of residence but when they move out they company must be informed. However, if there's a chance of them returning to the premises then the contract is not completed.
Most reputable companies will not push for the sale. They are, after all, still collecting interest on the loan.
Perhaps some legal advice might be appropriate.
There are different types of 'equity release', so I'd suggest looking through the contract. They don't only vary in detail, but in obligations as well.
The person taking out the contract will, almost certainly, have a right of residence but when they move out they company must be informed. However, if there's a chance of them returning to the premises then the contract is not completed.
Most reputable companies will not push for the sale. They are, after all, still collecting interest on the loan.
Perhaps some legal advice might be appropriate.
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