Equity release

It can be a good thing, my mum and step dad took out equity release after we'd helped them researching the various options and deals available.

It enabled them to have a life style they otherwise would have struggled to afford and as Lynnburns has posted ultimately it's about what's best for you.

It didn't make any difference when my step dad had to go into a care home and eventually died; my mum continued to live in their house until her death.

It's great to be able to leave something to your children and GC but we wouldn't allow that aspect to dictate any decision we may make in the future.

We took out an equity release mortgage in 2002,for £30000.The money paid for holidays ,some home improvements, assistance with offsprings weddings. This was an interest only mortgage and the £30000 owed will not increase.Fortunately we could afford the monthly repayments. We had both retired early, husband at 55 and me at 52 ,seven years earlier.Sadly my husband died 16 months ago ,I still pay the mortgage altho I have saved enough to redeem it .We talked it over with the family and they supported us after realising that the amount borrowed would not increase.
We never had any regrets and travelled the world leaving me with so many happy memories and wonderful photos.

I was recently looking at equity release with our home and came across this article - www.acumenfinancial.co.uk/equity-release/how-does-equity-release-work/ - that gave me a pretty good overview of equity release.
Combined with the link that Alistair posted, I think I am much clearer on what equity release actually is, but I am still not sure on if I should go through with it.
Craftyone, I will certainly take your comment on board before we actually look into it further.

If you love where you live and it is future proofed for you, then go for it. Be aware that ER can trap you, some in laws did it many years ago, they are now trapped in a 3 bed detached house, in their 80s they can no longer afford to move because of the added interesr

Equity Release is something that should be discussed with a professional to see if it's a good fit for you currently. I would suggest if you were to take ER out and want to leave more of an inheritance to any relatives, you should pay off the monthly interest. That way it doesn't roll up and the compounding effect wouldn't take place. If you don't care about leaving anything behind and want to have as much cash in the later years, simply make no monthly payments.

What do you think of this guide of what equity release is? www.equityreleasescotland.org/faqs/what-is-equity-release-and-how-does-it-work/

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I was going to do this 3 years ago. I got as far as the final hurdle but backed out at the very last minute. I’m soooo glad I did. I know life is a gamble but I just felt uncomfortable about the possibility of the debt racking up year on year and wiping out my children’s inheritance. I think it’s ok if you haven’t got anyone to leave your property to but NOT when you’ve got children.

Older people can get equity release as an interest only lifetime mortgage. You pay the interest so that the sum owed stays the same. It all depends on whether your income is sufficient to service the mortgage.

Mistake above sorry.

My mum and dad got equity release with this company: Equity Release They spoke to a guy called Glen who was really helpful (no pushy sales). He helped them keep their house whilst having a good chunk of cash out and they will still have equity in the house when they die. They have a calculator tool that helps see what you can get: Free Equity Release Calculator

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Oooops I mean if it COULD have been foreseen and the deprivation was deliberate.

Yes, if you need residential care in the future your home is still your main asset and, if you didn't need it to live in, it could be sold. The equity release 'lifetime mortgage' would need to be paid off first from the proceeds of the sale. If there were 2 of you, as there are of us, the house could not be touched as long as one person still needed it to live in.

It's my understanding - from reading Martin Lewis's moneysavingexpert site - that the issue of deprivation of assets only comes into play if there is a suspicion that the new situation - going into residential care - couldn't have been foreseen i.e. the home owner/s were relatively youthful, fit and well at the time they did the equity release.

Actually I've got muddled. This isn't an issue about equity release. The older persons home would be sold. Sorry!

Another issue may be if we need residential/nursing care in the future. If some of the money had been used to adapt a son/daughters home to create an annexe for ourselves, obviously this would enhance the value of their home. So perhaps this would be treated as deprivation of assets and who would be liable to pay the care home fees!

Further to my post of yesterday, here's where we are at present:

Equity release in late 2003 to pay off existing mortgage of £45K. Property then valued at £140K, original price when I bought it in 1990 was £56K.

Interest rate was tied to the BoE rate which has remained historically low for a number of years now.

Statement received annually. Now, we owe £63,078.66. After 13 years. The value of similar properties, when kept in good condition and modernised as appropriate, is now approx £220K.

When we die this is planned to be split 3 ways. One quarter each to his son and daughter and one half to my granddaughter.

I think there will be a bit of an 'inheritance' left, even though it wasn't what we planned to do. The main thing is, we don't have a mortgage to pay.

Victoria if your mortgage is small I can see no point in equity release.
Even if you downsized to a smaller property the removal costs would eat into any money you make on the sale of your present house.

MOnica you are so right- I am now 72 and my parents died tragically in 1979, so although being an only child, I inherited the house but situated where it was it was not worth much but it was enough to help towards a deposit in London. I would think that my savings and sale of house money will be earmarked for my care home fees if required, then the state can take over.

Bez You are a generation out of date. The youngest war babies are now 71, the oldest 77, I think very few of them still have parents alive to inherit from.

It is the 'war babies' who are now the elderly and it is their children, who have student debts in their 40s, huge mortgages, little equity in their house, and insecure jobs who are worried about losing any inheritance.

I have never met any inheritor who has spent their inheritance on new cars or holidays of a lifetime. Just people approaching old age, who use their inheritance to help their children buy their houses or who are sighing with relief that they have enough money to pay their own care home fees if necessary and need not be dependent on Social Services putting them in the cheapest home they can find and pressurising their children to contribute to their care.

Its not the fact that there will be nothing left - its the fact the bankers etc do so well and you get such poor value for all the scrimping over the years to pay off a mortgage.

Do Not Do it!!!

Not a good idea !!!
Read Martin Lewis's (financial experts) article about equity release. He will tell you to avoid it at all costs ☹️

Equity release can be good under certain circumstances and if done properly through a good Financial Advisor. In any case, find yourself a Financial Advisor with an impeccable reputation and ask for advice.

Ì cant see a problem ìf the worry is that "There wont be any house value left for the kids to inherìt' So what. There was no house value left for "war babies" to inherit as most of their parents then rented.Those war babies went on to always be in work and to enjoy the benefits of final salary pensions. Why should they also expect to inherit the value of their parents house just to spend it on new cars or holidays of a lifetime ? ???

Equity release is definitely not for everyone and careful scrutiny is required. However it is highly regulated now and to give advice advisers have to sit additional specialist exams.
I have seen it work wonders for some people- allowing them to continue to live in their home, and also had clients where it would just not work for them. Although I always encourage people to involve their adult children, you must really do what you feel to be the best for you and what you want. After all - life is for living.
Always always take advice from and independent financial adviser.
(*should 'fess up that I am financial adviser well as an adoring gran! )

Some sound advice here.
We made tentative enquiries last year, just out of interest.
What seemed to be clear was: if you're relatively young (early 60s) with a normal life expectancy, avoid like the plague as the interest will be rolling on for many many years and the amount of cash released will be relatively small.
If you really really need a cash lump sum and have no other means of raising it, spend plenty of time researching different options and seek legal advice first.
If you are older (late70s onwards) you may get a bigger lump sum.

Check out all the details, and have questions prepared before you speak to a company. What are the interest rates, how and when might these change, when does the plan end, what happens if one person dies or gets ill or goes into a home, How are future or present benefits affected?????

May I give an alternative view of equity release?

We'd heard all the gloom and doom when we did this in 2003, but we were tired of paying £260 a month on a mortgage. We'd have gone on paying this until we were 83 and, we thought, just in time to die and leave it all to someone else.

Everything changed when my beloved younger daughter, DH's beloved stepdaughter, died very suddenly at the end of 2002.

To cut a long story short, we decided to do equity release. It CAN be a bad deal, it can be a good one, depending on the deal you get. We think we got the best possible deal. The interest on the £45K equity release was pegged to the Bank Rate. As this has been historically so low for so long, the interest has not rolled up at anything like the rate we were warned about. To balance this, property prices have risen. In this area, with development of the local airport under Stobart's control, people need homes to live in, and a 2-bed bungalow like this one is an ideal starter home. In addition, not having the mortgage to pay on the £45K has freed up money for home improvements. In 2005 we needed a new roof to replace the old asbestos tiles. We've just had a completely new bathroom with walk-in shower - this is because of increasing age and infirmity. All this keeps the value to offset against the interest owed. Now we're told, the BR may go even lower.

However, I would echo what others have said. We've been lucky - who could know that the BR would stay so low for so long? Shop around. Get proper advice. The conveyancing solicitor who did this for us had a check-list of points to go through. One was the effects on any inheritance. No one in our family on any side was at all interested - it's your money, do what you want with it. Also, we're not claiming any means-tested benefits - these would be affected if we were.

It's a very serious step to take and demands serious thought and consideration.