Equity release: anyone tried it?

[betty swollocks]

Experiences please?
Pros?
Cons?

 

[ASC1951]

In a former existence I used to deal with these, as a property lawyer advising clients whether to take out such a scheme or not. It is an expensive way to borrow money and in many cases people would have been better off finding some other solution.
It's a big subject and advice is specific to individual circumstances, so I wouldn't be relying on an internet chat room for my decision. Start here, for instance http://www.equityreleasecouncil.com

 

[betty swollocks]

In a former existence I used to deal with these, as a property lawyer advising clients whether to take out such a scheme or not. It is an expensive way to borrow money and in many cases people would have been better off finding some other solution.
It's a big subject and advice is specific to individual circumstances, so I wouldn't be relying on an internet chat room for my decision. Start here, for instance http://www.equityreleasecouncil.com

Thank you for the link
Already done a bit of research and wasn't thinking of doing anything immediately. However, I will be 60 in Dec 2015 and am starting to explore all the options open to me, with a view to going part time or, better still, ceasing work altogether.
Wanted people's subjective experiences.......

 

[Doseone]

Often based on the projected market value of the house (= forced sale value) rather than the actual market value.

 

[Over The Hill]

Also involved in property sales. It is a bugger when you want to change houses.

I would guess they would only hand over to a young person like yourself a very small proportion of your house value and you will then see them eat away at your share in the years to come.

In france they have a system of people buying your house off you but you have a life tenancy of it. So a gamble on how long you will live. That seems a better way of doing it.

 

[alicat]

The French system didn't work out well for the buyer of the house of the French woman who lived to be 120.

 

[Over The Hill]

[QUOTE 2656149, member: 259"]Rente viagère. You'd be vanishingly unlikely to get them to do it for a 60 year old though! The idea seems a bit creepy at first sight, but in fact it's still quite widespread.[/quote]
It is simple to set up but there is quite a gamble involved. Perhaps better to club together with a dozen others to spread the bet.
The price paid reflects the odds. A 90 year old in a 100k house may get 70k while a 60 year old only 20k if he is lucky. Same with equity release which will really not offer much to a 60 year old.

Perhaps depends on situation. Someone with no heirs is best popping off with nothing in the bank but others may not fancy doing that if they want to leave their kids something.
Bottom line is that it is daft to be poor in a £250k house. In old age people often will downsize as their needs change and often the ease of a flat or smaller place if they are alone is a bonus that comes along with the release of cash. I quite fancy going somewhere sunny, I am sure our winters are extra grim for the old.

 

[Archie_tect]

Bottom line is that it is daft to be poor in a £250k house.

My mum took out an interest only mortgage to buy a private retirement assisted-living flat but got fed up with the service charges and the sneaky covenant to pay 1% of the original purchase price for every year she lived there... so sold it, put the money into various bonds and savings plans and moved into a 1 bedroomed council. With her small NHS pension, her state pension and her annuity, she is better off now than she could possible have ever imagined and loves it. I would be wary of signing up to equity release companies, like all for profit private companies they will pay as little out as they can legally get away with, under their extensive Terms and Conditions..

 

[MontyVeda]

I used to be a copywriter for an equity release firm and have written many interesting and informative articles on their behalf... no wait... I was repeatedly expected to spout bullsh!t to make their sh!tty scheme sound better than it is.

 

[User6179]

Experiences please?
Pros?
Cons?

I remember hearing of one company that did equity release going bust and the customers that took out equity release were evicted and there homes sold off to pay the creditors!

 

[swee'pea99]

I did it for my Dad - he was in a house worth a fair bit, but had no income other than a risible pension. Borrowed a lump sum, at a fixed rate of, if I remember rightly, 7.9%. So basically every year the amount owed went up by that amount, to be settled at whatever the prevailing figure was, when the house was sold. He ended up having to sell up three or four years later...alarming to see how compound interest works in practice, and if he'd stayed very much longer it could al have gone a bit pear-shaped. Ended up being, as someone said upthread, an expensive way to borrow money, but overall, it worked for him. He got to cash in some chips at a time when he needed cash more than chips, and he'd no better options available.

 

[Flying Dodo]

As mentioned above, only look at lenders who are part of the Equity Release Council. They have a code of conduct to ensure situations such as being thrown out of your home can't occur. Having said that, equity release should only really be looked at if there aren't any other options available for raising capital, especially bearing in mind the high interest rates applicable.

Anyone considering equity release should really also ensure their family are kept in the loop, to avoid nasty disagreements later on with relatives expecting to inherit.