Equity Release

I'm 58 Mattash! And was expecting to retire in 2 years time - just waiting to get some equity release from my property so that I can cut down my hours. Post copied from topic Retirement on 19th Nov 2020 7:24 pm

Hi all This advert appeared on my Facebook page today - www.equityrelease4over55s.co.uk Many folk who decide to release equity from the value of the property that they are living in, often discover after the event that they have given themselves a life sentence of being a prisoner in their own home. At some point, someone will have to meet the cost as this is not a free service & that just might be you, not someone to whom the property has been left to. Any number of changed circumstances could bring about a situation where you wanted or need to move house, but equity release will prevent that until the entire release value has been repaid, along with the huge fee. I would not dream of telling anyone what to do in their life circumstances, but I do want us all to know & understand the actual facts. ps: Equity Release frequently asked questions The above links with some of the basic questions & answers. One of the questions & answers : Can I move home if I want to? All providers that are members of the Equity Release Council, have to allow you to move if you want to, without charging a penalty - subject to the new property meeting the lender’s acceptable property criteria. The last part of that answer is as good as No!

I wonder if this equity release could be used as a way to prevent you losing your property in the event that you have to go in a nursing home? I have always thought it unfair that whilst people without savings or their own home can get nursing home care for free, those who struggle to pay a mortgage for 25 years are forced to sell their childrens potential inheritance to pay the fees.

Hi all Equity Release. The above article states ten good reasons for releasing part of the value on your home & for many folk it is a legal way of providing extra funding in old age. The implication of reducing your tax burden is possibly the most attractive aspect for many. Do remember though, that benefit is only under the present rules regards property ownership. They could change at any time particularly as so many are doing it nowadays. Parliament only has to change the rules, so that it is whoever's name is on the deeds, without any reference to whether there is a deferred debt to be settled. The other thing to take into account, is just ask yourself why is this being offered? Someone comes along & gives you say £30k, with a binding contract where they receive £30k when the property is not needed anymore. Not quite right. Yes, you might receive the £30k, but the debt owed maybe twice or even three times more than that value. It is not being done for nothing. So, please spare a thought for that. I saw a stat recently, for a huge well-to-do area of one of our nearby towns where equity release was affecting over half the homes. That volume of devaluation going on under the noses of parliament, might just force a change in what folk have to contribute for receiving care in the future. Just my own thoughts. In my own case, if I was single & living on my own, under current rules it might be viable, or at least worth a consideration, but an absolute no-no for me as part of a living couple. We could be leaving a noose around the survivor's neck.

Hi all Equity Release I have said so much about this issue but whatever the myths or non-myths, what is fact is that very little if any is ever left over for family or loved ones following equity release. That is why we are all being encouraged to do it. You obtain 40% of your home value, the remaining 60% goes to the "fat-cats", not anyone else. They are laughing all the way to the bank!

Hi all A news item that has caught my attention. Equity Release, may be a big factor, will explain my reasons. The sixties, seventies & eighties were big city exodus times for so many, either early retirement with moonlighting interests or even those exploiting that scenario of folks with a few bob to spend on luxury items & services. As their funds dwindled, many have turned to equity release. That only lasts fo so long, plus the fact that equity release is as good as giving the property away with cornflakes. The reason being that in less than a decade from the cash release date, more is owed on the property than the property is worth. That is why, inspite of the mass advertising giving some advantages for equity realease, for a couple living in their own house, to release whilst both are still alive, usually leaves the survivor as a prisoner in their own home. This scenario is not just confined to seaside towns, many of our local high value housing estates are in the same "boat", but not in the same volume as being described in this news article. Please don't misunderstand me. I am not totally against equity release, but I do wish that folks understood the implications & risks of doing it.

Hi all, The Perils of Equity Release, be warned.

Hi all A tele program on channel 3, ITV is going to highlight the treacherous nature of equity release on the property that you are living in. I have spilt so much ink on our forum on this issue, that I believe is far worse than the endowment link mortgage fiasco. Folk just don't realise the implications. ITV. 7.30 TONIGHT.

Hi all, Sorry to annoy you with my old moan subject, but two Equity release stories have unearthed themselves to me in recent weeks. One, a widow in Coventry, another in Nuneaton. In both cases, each widow was expecting a financial provision from their substantially valued homes, but alas, in both cases the cupboards are empty. Folk just do not realise the implications of compound interest, where just a fairly minor/modest release of a few bob, in one case just over £20k twenty years ago, now means that the home, in a very well to do area of Coventry has no value for the widow, at a time where she was hoping to employ carers. Neither of these families could be described as stupid, both, skilled members in society, but their finance expertise, zero. Equity release is easy, too easy, often portrayed as the obvious solution to a cash shortfall. There are various ways to manage it, if it's undertood, that for example would require a relatively small monthly payment, just to pay off the interest in its infancy when it is manageable, not waiting for the value to rise to £7k a year. I'm honestly so sorry to gripe you with this issue, BUT, PLEASE, PLEASE BE WARNED!

A very important warning Philip. I was well advised from the get go since I took out a repayment mortgage at the height of the endowment selling era. Every bit of spare cash went to paying a bit more off. I liked the idea of having a guaranteed roof over my head. It would take a lot to persuade me to reverse that process.

The issue is so rife in this age of DIY. Do it ourselves. I'm hopeless at home DIY. I rely on someone that knows what they are doing. Have you ever seen my plaster work? No & your not likely to either, there isn't any. We so think that we can do anyone else's job, but I tell you, I can't. I've spent my entire working life in all aspects of finance, insurance, risk & so on. So if I can't look after my own financial affairs, what was someone paying me to look after theirs for forty years. Some folk can never be told. I will finish with an amusing story, Helen. Some of you know that I come from a Methodist tradition. Some Methodists don't approve of gambling. Another Methodist jibed me one sunny day with a criticism, because I enjoyed putting a few bob on a horse now & again. Sadly, I replied with a hint of anger, that unlike him, I hadn't bet my house roof on the stock market. Just a few months later, when he thought that he had finishing his mortgage, he had to go cap in hand, back to to the bank to ask for a fifteen year repayment mortgage. I've grown up a bit since then. Endowment mortgages, equity release, wills, insurance & so on all have their place, & can work well, if they are understood. Three quarters of the UK adult population haven't a clue on financial strategy.

My dad was my financial advisor - as kids he didn't give us money but instead wrote an IOU a bit like a bank statement. If we wanted to buy something, we had to make the case that it was worthwhile and value for money. Even now a little voice asks 'but do you really want it?' Often the answer is 'no' and I walk away. Sometimes it's very annoying

PhilipInCoventry, Very wise advice given in your posts! I have always viewed equity release with great suspicion. The television adverts are extremely clever at tapping into most people's desires - be that those expensive home improvements, such as an extension or conservatory, or helping your children onto the property ladder. The salesperson is portrayed as almost a family friend, as he/she sits down and apparently explains everything to you - how straightforward and easy the process is, how the salesperson will 'search for the best deal' for you, etc, etc! In the most recent one, the salesman even arrives in the pouring rain, clutching his case over his head! However, by the time he leaves, the sun has come out and dried up all the rain... and everyone is smiling !!... especially him as he drives off calculating his commission no doubt?! The whole thing reminds me of the old double-glazing salesmen - they would always "phone their manager" to get you the best deal!! I, for one, fully expect equity release to become another mis-selling scandal within the next few years.

Hello Oddsock, A thumb rule for equity release, is: If the release value is 20%, all equity will be gone in twenty years. If it's 40%, (the average) then all equity will be gone in nine years. Another aspect is the finance company. Had the Nuneaton couple chosen a building society, the cost of the release for the twenty years would have been £121k whereas they used a finance company, which cost them £181k for the same amounts.

I've just started reading a book by Andrew Craig, who goes even further and says many rich people don't either, including millionaires; some professional footballers, earning more in a week than most do in a year, mishandle money so badly they get into debt, turn to crime and end up in jail. The two main things that we should all be aware of, he says, are that, i) anyone thinking that the government will look after them in retirement, i.e. via state pension, is going to be in for a rude awakening, and ii) since the year dot, governments try to pull the wool over our eyes by claiming that inflation is very low; over the last 10 years, CPI is 1.1%, whereas the average price of things like wheat, corn, heating oil, gas, meat, copper, coffee, gold, silver and so on has risen by over 30%. So the real value of the pound in your pocket (or damn-all interest rate bank account) is steadily eroded over the years. Little wonder that a few decades ago, it took the average FTB 3 years to save the deposit on their first home, whereas now it's 23 years!