Equity Release Warning

The early repayment fee depends on what the gilt price is and as it’s dropped half a percent our erc is 17,000 ?. I guess we could rent out the bungalow but I’m not sure its something we would want to do. We are going to speak to Nationwide tomorrow to see what they can do for us. We will probably look for an alternative that is acceptable for us to port the loan to. Thanks everyone for your suggestions?

If you look on the Financial Ombudsman site there are some examples of what they deemed fair and unfair. The Ombudsman has the power to intervene if he believes you have been misold. Worth a try?

Otherwise, if you have to move, would you be allowed to rent out your bungalow and use the money to rent a flat?

I think you'll find all equity release schemes are fixed rate because they give you a breakdown of what you will owe at each and every stage of the loan. Also they can pay the loan of early they just have to pay early repayment charges.

Sorry you have been caught by this, as it is a bungalow it’s probably best to stay where you are for now if you can. It sounds like the interest on the loan was fixed rate, if it had been variable there should not have been a penalty.
Be very careful of Equity Release schemes, if your circumstances change they can bite you, always get a deal that you can pay off early if you need to

Retirement flats are notoriously difficult to sell and that is why they wont allow you to transfer your loan you could buy a different property and take it with you. They are simply protecting their interest in your property. I found they answered all my questions clearly and made it quite clear any property would have to be deemed suitable to transfer to and I may only be able to transfer part of the loan. The early repayment fees are generally on a sliding scale and disappear completely after a max of 10 years. This should have been given in writing at the time you took the loan out.

So sorry to hear this. You say you had advice at the time but this wasn't made clear to you - if this was from a solicitor or accountant you could have a claim against them.

Exactly, gillybob, a retirement flat is not a good investment - could even become a liability. That's why the equity release company won't agree to it. You'll have to either downsize and pay the debt off or choose another type of property.

Are you saying that the equity release company will not allow you to transfer to the retirement property NanaPlenty? Apologies but I’m easy confused.

I am not entirely surprised if that is the case as I have heard there can be all sorts of problems buying into a retirement property (well more trying to sell).

Resale value is almost always a lot less than what was paid.
Resale is often difficult as there is a restricted market.
Management fees (often quite considerable) continue to be due even when the property is empty .

Maybe the equity release people are worried that fees will eat into the value and they might not get their money?

How awful. I hope you do complain and are compensated . Thank you for the warning.

Yes indeed it is I feel I should make some sort of complaint?

That terrible-