Equity Release (1 Viewer)

[PORKSTER]

No there is other ways mentioned but hey life's a gamble and fun is expensive

 

[chrisgreen]

WE took out ER 4 years ago, after lots of research and independent legal advice, no regrets so far, we did it through Aviva themselves, all went very smoothly, they will only lend you up to 25% of your property value, and you will never have to repay more than the value of your property.
We have no dependants and could not realistically downsize comfortably from a 2 bedroom bungalow, we will only have to repay the mortgage if we decide to sell the property, or are moved into a nursing home.
Assuming I keel over first, my O/H will be able to live here by by choice as long as she exists.
After we have both expired, our solicitor will sell the property and pay Aviva their due, the rest of any estate we have left to Norfolk Wildlife Trust of which we are keen members.
We did not buy our M/H with the money but have had some fabulously memorable holidays we could not have afforded otherwise, and have made many improvements to our property, works for us so far.

my sister done the same also with Aviva,on the same conditions as yours,this was on a house worth £425000 reason being she has lived in the house since she got married and has her granddaughter living with her and did not want to downsize,so as nether her or my BIL had private pension to fall back on,only state pension my sister would have to have kept working forever,my BIL is ill and unable to work so she decided to release 25% of the value of the house so she could retire without having money worries.

 

[chrisgreen]

Has anyone done Equity Release to get a bit extra money to make retirement a bit easy. Never had a chance to save much or get a private pension so thinking of going along with equity release. Morgage paid kids up and they are not interested in us leaving anything for them when were gone our parents never left us nowt and are kids think the same use the money in the house and enjoy what time you have left you only live once etc. fun!!! fun!!! fun!!!

go for it,you are a long time dead.

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[chrisgreen]

we are selling the house in 7 years time and renting something cheap somewhere,thats our plan.

 

[Robert Clark]

we are selling the house in 7 years time and renting something cheap somewhere,thats our plan.

The difference being that you will have all the proceeds from the sale in your bank account rather than in the hands of the equity release company... Sounds like a plan!

 

[Movinon]

If you've owned your own home, how comfortable will you be with someone else calling the shots:
Renting - the landlord will call the shots
Equity Release - the ER company may have onerous requirements you must meet
Mortgage - the debt will hang over you
Park home - the siteowner will have you over a barrel

What looks a good deal today with a reasonable company may not look so good tomorrow when they sell their interest on to some crook. Downsize and stay in control, the only person with your interest at heart is you.

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[Wildbill]

don't ER just get smaller house or go for a park home
bill

 

[injebreck99]

Hey Jesuis, we cannot downsize any further unless we want to live in a park home, and they do have some excellent features, we have friends who have them, but you are still at the mercy of the site owners and their whims, and site fees can be expensive.
We live in a 2 bed bungalow, which we love, we love the area, our neighbours are great, we can park our M/H off road, why would we want to move!
The only restrictions placed on us is we have to inform Aviva if we will be away from home for over 60 days, and as I said, if we want to sell our property. Works for us.

 

[buttons]

my sister done the same also with Aviva,on the same conditions as yours,this was on a house worth £425000 reason being she has lived in the house since she got married and has her granddaughter living with her and did not want to downsize,so as nether her or my BIL had private pension to fall back on,only state pension my sister would have to have kept working forever,my BIL is ill and unable to work so she decided to release 25% of the value of the house so she could retire without having money worries.

Sounds good when you say it like that.....how about servicing this 25% loan, the ER company will be looking at something over and above the standard interest only mortgage rate. Add to this their management fees plus mandatory maintenance works needed to keep the ER companies investment in tip top order and you can see your 75% will soon be in free fall. Fools gold......

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[chrisgreen]

Sounds good when you say it like that.....how about servicing this 25% loan, the ER company will be looking at something over and above the standard interest only mortgage rate. Add to this their management fees plus mandatory maintenance works needed to keep the ER companies investment in tip top order and you can see your 75% will soon be in free fall. Fools gold......

there is no loan,you sell 25% of your house or equity to the company,their profit comes when the house is sold.
the only problem i could see is if the house value was to drop to less than the value of the original 25%.

 

[ABZSteve]

This is what we have done, don't know if it is suitable for your situation.

We plan to downsize, probably once we reach our late 60s (fingers crossed ). In-laws (mid-seventies) wanted to downsize but couldn't afford to without having to take out a small mortgage and that kind of defeated the purpose ( Note, private apartments in decent areas up here can be more expensive than ex-council houses) So, I bought a two bedroom apartment 2 mins walk from my house, they sold their house and moved in once we refurbished it. They gave me back 50% of the value of the apartment and refurb costs and kept a handsome amout for themselves and are now very comfortable and very happy. Once the inevitable happens we will pay 66% of the 50% (based on valuation only) back in to their estate (wife has a brother and sister who need to benefit - all agreed, they could have helped but chose not to) then rent out the apartment until such times as we are ready to move in to it. When that time comes, we will sell our house and the hope is that we can retire comfortably. A bit complicated? not really, just needs agreement and willing sons & daughters. It may mean that they are paying out for extra loans/mortgages etc but they are then your "ER company" and will benefit in the end. Even though they say they don't want to benefit, they can help you release funds knowing that you have a happy retirement and they will have a small investment for the future. Sorry for the war and peace, just wanted to offer up another solution. Happy days, good luck

 

[Scout]

Ive started looking to downsize, wife takes rundancy end of May from hmrc, so nows a good time sort out the house for sale perpose and look for something, cheaper to run with no stairs to climb, and put some money back in the pot, only trouble is Im stuggeling to find something with enought car/motorhome parking space

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[Portland]

I am 67 is that young????? fun!!! fun!!! fun!!!

Hi, Yes 67 is very young these days, I agree with all the folk who advise against it but it is your decision and if you take advice best to go to your bank for advise because INDEPENDANT ( the first thing they look for is HOW much they make) advise has cost SWMBO and me many thousands ending up with the ombudsman who was as good as a chocolate fire guard. Good luck

 

[buttons]

there is no loan,you sell 25% of your house or equity to the company,their profit comes when the house is sold.
the only problem i could see is if the house value was to drop to less than the value of the original 25%.

I'm no expert Chris but whatever funds the ER company have tied up in your sisters bank will have to be earning interest. If that interest is not being paid weekly then it will be building up against the property. The next year interest will be charged on the interest I'm afraid. Your sisters equity in the property will pay this when the house is sold.
I dont see any other way that it can work. Perhaps someone with more experience could put me right.

 

[Robert Clark]

Would this work?

An rough example
Say your house is worth 200K
Release £100k by taking an Offset Mortgage (any savings you have reduce the interest you pay on the mortgage)
Put the £100k into the bank - therefore on day 1 you pay NO interest on the mortgage
Draw down say £500 per month (or whatever you need)
After 12 months you have taken £6,000 - the interest you would pay on this (at 4% PA) would only be £240 for the year (or £20 per month)

I appreciate that you would earn no interest on the £100,000 savings but the cost of drawing down the money would be very low too, PLUS you've still got £100k equity in your home and have not had to move.

Also, if you had a 1-2-3 credit card, and used it for all your expenditure, you'd be earning money towards your mortgage interest repayments.

Does this work - or did I miss something?

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[chrisgreen]

I'm no expert Chris but whatever funds the ER company have tied up in your sisters bank will have to be earning interest. If that interest is not being paid weekly then it will be building up against the property. The next year interest will be charged on the interest I'm afraid. Your sisters equity in the property will pay this when the house is sold.
I dont see any other way that it can work. Perhaps someone with more experience could put me right.

thats correct the interest will be paid when the house is sold,i believe that there is a fixed sum of interest,and when the house is sold the 25% of the value of the house should have increased and hopefully cover the fixed rate of interest,if it does not then then the full cost of the original 25%plus the interest has to be paid out of any money received for the house before any beneficiary's get their money.

 

[buttons]

thats correct the interest will be paid when the house is sold,i believe that there is a fixed sum of interest,and when the house is sold the 25% of the value of the house should have increased and hopefully cover the fixed rate of interest,if it does not then then the full cost of the original 25%plus the interest has to be paid out of any money received for the house before any beneficiary's get their money.

Sounds good but I can see much small print in the big picture.

 

[chrisgreen]

Sounds good but I can see much small print in the big picture.

my sister paid a solicitor to trawl over all document's,so should be safe.

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[tick59]

Thanks for all the coments as a working class man who bought an ex council house worth approx. £100.000 I have relised I am wasting my time going down this ER line. I would probably end up with about £20.000 if i was lucky.The morgage is paid I own my own home cant see it selling and downgrading so just have to carry on skint but alive and kicking adventure before dementia, live the dream, spend the kids inherintance MY ARSE.Whithout money you carnt do it. fun!!! fun!!! fun!!!

 

[Puddleduck]

If your family are able to buy the house or even part of the house from you and get their names on the deeds as either full or part owners that could be a solution. Again take advice as it may have an affect on inheritance tax if you come into that bracket.

 

[Scout]

Would this work?

An rough example
Say your house is worth 200K
Release £100k by taking an Offset Mortgage (any savings you have reduce the interest you pay on the mortgage)
Put the £100k into the bank - therefore on day 1 you pay NO interest on the mortgage
Draw down say £500 per month (or whatever you need)
After 12 months you have taken £6,000 - the interest you would pay on this (at 4% PA) would only be £240 for the year (or £20 per month)

I appreciate that you would earn no interest on the £100,000 savings but the cost of drawing down the money would be very low too, PLUS you've still got £100k equity in your home and have not had to move.

Also, if you had a 1-2-3 credit card, and used it for all your expenditure, you'd be earning money towards your mortgage interest repayments.

Does this work - or did I miss something?

1 major drawback i ca nsee on this is which of use are able at our age/income to get a mortgage of £100k it may be that the yongsters on here could but not us oldies

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