Equity Release
Discussion
Right, well my old dear is finding it harder to make ends meet. She is approaching the age where equity release is allowed. There is no mortgage as that was covered when my old man died a few years back.
What I'm looking for is anyone with any experience of equity release or such schemes, and would anyone recommend it?
Thanks for any help.
What I'm looking for is anyone with any experience of equity release or such schemes, and would anyone recommend it?
Thanks for any help.
How much does she need? If it is only a relatively small amount, would a possible option be for her to take out an interest only mortgage and you and your siblings if you have any, pay the mortgage for her.
A friend's mum got a quote, they wanted to take a measly 15k but they would have had to pay back around 75k when they snuffed it.
There was also a programme on TV that highlighted the case of a little old lady that had used equity release for a paltry amount, that company then went bust and she ended up losing her house and living in council accomodation.
Get as much info as you can, but personally I would use them as a very last resort.
A friend's mum got a quote, they wanted to take a measly 15k but they would have had to pay back around 75k when they snuffed it.
There was also a programme on TV that highlighted the case of a little old lady that had used equity release for a paltry amount, that company then went bust and she ended up losing her house and living in council accomodation.
Get as much info as you can, but personally I would use them as a very last resort.
Edited by Tuscan Tart on Tuesday 26th August 20:54
There's a product called a "Lifetime Mortgage"
Effectively it runs until she passes away, and all she has to pay is the interest on the outstanding mortgage each month.
My Dad died, god bless him, and Mum was left with a £40k mortgage.
She pays £250 a month interest, and when she passes away I pay the £40k off whe3n I sell the house. She does not have to pay back any capital.
It's a good safe product. Google it. Halifax do a good one.
Effectively it runs until she passes away, and all she has to pay is the interest on the outstanding mortgage each month.
My Dad died, god bless him, and Mum was left with a £40k mortgage.
She pays £250 a month interest, and when she passes away I pay the £40k off whe3n I sell the house. She does not have to pay back any capital.
It's a good safe product. Google it. Halifax do a good one.
Look for a SHIP registered plan provider. (I can put you in touch with an equity release specialist, but they charge fees, so the last resort for me)
Your mum, and any potential benficiaries of her will(i.e. YOU) will need independent legal advice regarding the ins and out of Equity Release,be it a lifetime mortgage or a home reversion plan. Soov has mentioned Lifetime mortgage, alot of the other posters are I bet going against home reversion, both need serious consideration. The terms and conditions of these things are still evolving, and the differences between plans and providers are pretty wide.
If you want to do a bit of research, use this as a starting point http://www.moneymadeclear.fsa.gov.uk/products/equi... then follow the links to their equity release booklet.
Your mum, and any potential benficiaries of her will(i.e. YOU) will need independent legal advice regarding the ins and out of Equity Release,be it a lifetime mortgage or a home reversion plan. Soov has mentioned Lifetime mortgage, alot of the other posters are I bet going against home reversion, both need serious consideration. The terms and conditions of these things are still evolving, and the differences between plans and providers are pretty wide.
If you want to do a bit of research, use this as a starting point http://www.moneymadeclear.fsa.gov.uk/products/equi... then follow the links to their equity release booklet.
Hi there, have sent you an email. My wife specialises in these kinds of mortages, have sent you the contact details to your mail account. I'm sure she will be able to help. She will only generally advise on these if its really the best option for the client, and will look into other ways which you may not have thought of yet. Hopefully she may be able to help you out.
Edited by BlueEyedBoy on Wednesday 27th August 00:05
Equity release a costly choice
Stephen Womack, Financial Mail
A generation of retired property owners risks losing out through signing up to expensive equity release schemes that allow them to withdraw money from their homes.
In most circumstances they would be better off selling and moving to a cheaper property.
Someone looking to release £50,000 from a £250,000 property could be more than £150,000 worse off after 20 years by choosing the most expensive type of plan, rather than downsizing.
Put another way, they are paying the equivalent of £7,500 a year to stay put.
These are the conclusions of a study commissioned by the Financial Services Consumer Panel, which advises the Financial Services Authority. The panel hired actuaries to do the number crunching.
In most cases the actuaries found the odds were clearly in favour of selling up, though in some cases a lifetime mortgage worked out better value. Home reversion plans were found to be the most expensive option in almost all circumstances.
Lifetime mortgages are loans where the interest is not paid monthly, but is added to the sum owing, increasing the overall debt. In the case of equity release, though interest rates are fixed, most loans double in size in about ten to 12 years. The loan is repaid only when you leave your home and sell it. Companies offering these loans include Northern Rock, Standard Life, Prudential and Norwich Union.
A home reversion plan works differently. The company buys a stake in your home for less than its market value, based on your life expectancy. You can remain living there rent-free, but when the property is sold, the reversion company takes its cut from the proceeds. Firms marketing reversions include GE Life, Bridgewater Equity Release and In Retirement Services.
The consumer panel report did not conclude that equity release firms were profiteering and found their products were fairly priced. But John Howard, the panel's chairman, says: 'Customers should be aware there is no obligation on advisers to tell customers that downsizing without taking any financial product is likely to be the cheapest option.'
A smaller home is also likely to have lower energy and maintenance costs and smaller council tax bills.
Stephen Womack, Financial Mail
A generation of retired property owners risks losing out through signing up to expensive equity release schemes that allow them to withdraw money from their homes.
In most circumstances they would be better off selling and moving to a cheaper property.
Someone looking to release £50,000 from a £250,000 property could be more than £150,000 worse off after 20 years by choosing the most expensive type of plan, rather than downsizing.
Put another way, they are paying the equivalent of £7,500 a year to stay put.
These are the conclusions of a study commissioned by the Financial Services Consumer Panel, which advises the Financial Services Authority. The panel hired actuaries to do the number crunching.
In most cases the actuaries found the odds were clearly in favour of selling up, though in some cases a lifetime mortgage worked out better value. Home reversion plans were found to be the most expensive option in almost all circumstances.
Lifetime mortgages are loans where the interest is not paid monthly, but is added to the sum owing, increasing the overall debt. In the case of equity release, though interest rates are fixed, most loans double in size in about ten to 12 years. The loan is repaid only when you leave your home and sell it. Companies offering these loans include Northern Rock, Standard Life, Prudential and Norwich Union.
A home reversion plan works differently. The company buys a stake in your home for less than its market value, based on your life expectancy. You can remain living there rent-free, but when the property is sold, the reversion company takes its cut from the proceeds. Firms marketing reversions include GE Life, Bridgewater Equity Release and In Retirement Services.
The consumer panel report did not conclude that equity release firms were profiteering and found their products were fairly priced. But John Howard, the panel's chairman, says: 'Customers should be aware there is no obligation on advisers to tell customers that downsizing without taking any financial product is likely to be the cheapest option.'
A smaller home is also likely to have lower energy and maintenance costs and smaller council tax bills.
Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff