Has anyone done equity release?

My mother took an interest only loan on her house quite a few years ago. It meant she had a lump sum which she used to go on holidays and improve the house. As she is paying the interest the debt doesn't go up. Of course it doesn't go down either but the house has increased in value a little. When she dies the interest will be paid and there will still be an inheritance for her children. This seems better than equity release as such. In retrospect it may have been better if she had taken a standard loan which would have been paid off by now but maybe she was too old for that at the time and this type of loan seems definitely cheaper than quite a few equity release schemes where you hear of people ending up owing the whole value of their house.

Please don't unless you have all the facts about what happens with the repayments, they double very quickly . Just get someone who understands the process like Martin Lewis, but really, really think about it.Would downsizing be so bad? Take care and good luck.

Hello Kandinsky, Yes we have just received ours ,we went through four companies, in all each had different things to add so we took our time and chose not the cheapest but the one we thought was best for us. We did of course discuss this with our children, as this will be needed, if and when the time comes that they inherit our home, we wanted them to be clear on what would happen in the future. The reason we went for Equity release, we as because we down sized to our forever home, and my husband had planned to do the work himself, which he was excited about, halfway through he was taken I’ll, had surgery, and is still recovering, However he will not be fit enough to complete the Extension, and fitting of bathrooms and kitchen, My advice is to take your time, and look at all the reasons you need to choose this option, good luck ?

Have a chat with a mortgage broker before considering equity release. You can still get a mortgage up to age 80 - if you can afford the repayments - and it's a cheaper way to borrow.

I understand that things have changed and the market is more stringently regulated now.

I did consider it last year when I did not know how the heck I was going to manage to pay the top-up fee for my OH's nursing home - I was adamant that he would have the best of care in the best possible surroundings whatever it might cost. In the end I opted to put my home on the market as I knew I would be happier a couple of villages away where all my friends are - so selling would generate the money I needed and give me a happier life. As it has turned out my OH died before all this could happen.

But.....what I did discover was that sometimes the interest you pay on a lifetime mortgage might - if you are lucky - be partially offset by the increase in property value when you sell. But times are weird now and there is no guarantee that the housing market might not slump now.

I took advice from a trusted financial advisor recommended by my SonIL's advisor. She was very open about it all as far as I could tell.

I am sorry that you find yourselves in this difficult situation. If downsizing really isn't for you, then it is worth looking into - but with sound impartial financial advice rather than a response to an advert.

I think you should take professional advice first.

Citizens Advice could possibly advise you.

Frankly, I wouldn't go in for equity release. I accept that some people may have a good experience but I think they're very much in the minority.

*No, you owe what you borrowed plus any interest if you dont pay any.

You owe an amount not a percentage.*

Ah, I see, thanks. I thought it was the other way round.

I know someone who took equity release and then had to sell to pay the equity release because she couldn’t afford the payments ! By the time she did that she had nothing much left over and ended up in a crummy little flat she hates !

Whatever you do, take independent legal advice before committing to something like this. Whatever you decide, good luck

Hazbeen ... exactly the same circumstances with my Mum. Mum and stepfather took £30k Equity release (or Lifetime Mortgage, as it’s called) on their home in 2004. SF has died, Mum is 91yrs old and in a care home. We (family) are selling her house to pay for her care home fees. Amount owed is now £81k ...! 6.75% interest ...
I’m not sure what their alternative choices would have been in 2004 but I would treat equity release with caution ...

My parents did. In nine years (till they had both sadly died) interest meant we were left with just 50% of the value of their house...

So if you do it, investigate the pros and cons very carefully.

I think you have to bear in mind that equity release companies are not in business to help you out ... they want to make money out of you. Just remember that when making your decision, but I have to say I would never do it no matter what the circumstances.

I had an interest only mortgage which came to the end of term and I took out an equity release mortgage. There are lots of products available with different options. For me it was a lifesaver as I don't want to move. I have the option which I have so far used to pay back a maximum of 10% of the original loan each year in between 1 and 12 payments a year. This covers the interest for the year plus part of the capital.
There are lots of different options so do your research, use a few different companies to get as much info as possible and only do WHAT IS RIGHT FOR YOU.
The market is much more regulated now than it was 20 years ago when most of the horror stories originate from which mean that you are much more likely to find a deal that is the correct one for you.
Do watch out for early repayment penalties and the conditions associated with them.

We took out equity release, then my husband died and I had to downsize. In two years I owed £20,000 in interest, and would owe another £10,000 if I waited two month's longer to pay it off. When I sold my house I paid off the £20,000. I wouldn't recommend doing equity release unless you have no other choice.

We took out a Lifetime Mortgage with Godiva in 2010, and I have never regretted anything more! Firstly their interest rate remains fixed, so that even when interest rates go down dramatically, theirs remains at 6%. Our idea was of reducing the value, and therefore IHT in the future, for our two children, and in the meantime getting stuff done and maybe grabbing some interesting holidays en route. We had, at the time, cleared our mortgage.

We got the roof fixed, but that was it, as my husband died in 2013, and since then I've been in no mood to holiday. At the time, the future seemed like a long way away, and the plan was recommended from a good friend we trusted. It's now 2020, and I'm thinking of selling/downsizing, so need every penny this house might bring, but that money is currently bleeding away - what a nice little earner it's been for these sharks. I certainly didn't go for the complete amount they kept offering me, which was a lot! Avoid these creatures like the plague.

It's not always easy to downsize and gave funds over. I would like to downsize but smaller properties are in such demand especially in a good area, that they are more expensive than my family home. Really research equity release as there are a lot of horror stories. Could you get a loan using your property as security. Obviously wouldn't be a long term answer but may help in the short term if you feel you will have an income later on.

No, you owe what you borrowed plus any interest if you dont pay any.

You owe an amount not a percentage.

I don't know anything about them from experience, but what strikes me about the adverts (the ones with Carol Vorderman in them) is that they always seem to recommend that you do home improvements with the money. As these will increase the value of your house, aren't you in effect borrowing money to increase the amount that goes to the loan company in the end?

Suppose you borrow £100k (for round figures) and that is 50% of the value of your home, which is worth £200k. If you then use £50k of that to get a conservatory and a new kitchen/bathroom that collectively increase the value to £350k, then instead of owing £100k, you now owe £175k (as the company owns half of the value of your house) plus you have been making payments on the loan, or accruing interest.

If I've got that right, they are even more expensive than they seem.

Equity release has changed and it's not a rip off, everything is set out for you to clearly understand exactly what you are getting into. It may well have not been a great thing in the past but these days it's fair and above board. Equity release and lifetime mortgages are the same thing these days.

It isnt daylight robbery now!!

It is daylight robbery.
I have had a complete nightmare dealing with my Mothers equity release company.
Be very aware that if in my mothers case you have to go in to a home and the property had to be sold the company can take over the property.

We have an interest only mortgage, quite a large amount (second marriage, ex dh didn't play fair

Would love to just stay in this house, no need to leave anything, as ds1 inherited a very considerable amount from my mother! Enough to buy 2 houses, plus investment etc!

If there was a way to pay off the mortgage, stay here until whenever.............

Thanks everyone.
Yes, I guess it all depends on whether you’re worried about leaving the children anything ( & whether they’re expecting an inheritance! )
Lots to think about.

If you look for Lifetime Mortgage, instead of Equity Release, you should find some info on the ones where you pay back interest so that the debt doesn't increase.

There are now some schemes where you can make voluntary interest payments (fixed interest) and take holidays when you want to. You can also transfer the amount to any new property you may move to.