Equity Release

People generally have heard all the horror stories and taken them as gospel. When I got divorced the house that was owned in my sole name and mortgage free since before that marriage was deemed to be jointly owned and as a result I was ordered to pay him £125,000 which the judge told me to raise by selling my home. I refused to do that and did as M0nica has just described I took equity release for the £125,000 which was the maximum they would give on a house valued at 415,000. I have always intended to pay the interest and so far I'm managing to do so. If they would have given me a mortgage I would have taken it but no one at that time was interested. He's got his hands on money he doesn't deserve and I'm left with the bill but at least I still have a roof over my head and one that continues to rise in value at that. Therefore the loan becomes an ever decreasing amount of the value. So I currently still owe 125,000 but I could over pay each year and reduce the amount quicker. Everyone except my kids including solicitor and barrister advised against equity release because according to them I would end up owning nothing but they didn't understand it any better than most people, nor did they believe I had researched it properly but I had.I can still sell up and move should I want to and have a reasonable amount to purchase with as the house is currently worth in excess of 500k less 125k in equity release. Which I can take with me, pay off or part pay off should I move. For me it was my only acceptable option as I had no wish to move and still don't. I'd rather not have a mortgage at my age but hey I could be paying rent till I die. Mine is with Legal and General and I dealt with an independent advisor who was very patient answering all my questions at length etc. These days it should be seen as a viable option for those who can't get a mortgage due to age but seriously I wouldn't have done it if I'd had more options and certainly wouldn't do it for the reasons given on adverts such as holidays, giving it to my grandchildren etc. They can wait till I die until then it's mine.

I think people are being unnecessarily damning on equity release.

Products now are far more variable. If you can afford to pay interest, you can get equity release plans where you pay the interest so that only the capital is repayable on death, you can get short term interest only mortgages that are repaid if you downsize and you can borrow a larger sum than you actually need but draw the money out only as and when you need it and interest only accrues on how much is drawn.

A wealthy friend has used equity release to reduce the inheritance tax on her estate. She is paying the interest and the money she has taken out has enabled two much less well-off younger relatives to move from poor quality rented accommodation while their families are young, rather than bring their children up in poor accommodation, only to inherit money after they have left home.

Similarly someone else has equity release on a large sum so that she can maintain her house but only draws it down as and when she needs it. She is currently accruing very little interest as she has, so far, taken out very little.

We are currently considering an interest only equity release mortgage to finance an extension, the mortgage will be repaid when we move house or die.

I am probably going to go down the equity release path. Can't downsize unless we live in a tent! and for reasons I have previously posted an in need of capital. We have a kindle each but no laptop, so no means of printing and my husband cannot cope with dealing with matters this way. I cannot find any firm willing to send me a printed brochure, does anyone know of one?

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Sorry about the previous "asdf". I clicked enter accidentally and don't know how to remove it now . Just wanted to add my 2 p worth. Equity Release did have a bad rep in the past and there were some horror stories of people ending up in negative equity and owing the banks money due to the high interest rates.

In Martin Lewis's example, the rate of 6.5% is mentioned. I haven't seen a single plan these days on that kind of interest rate after doing some online searching. Plus, the lenders allow you to make repayments if you wish in order to offset some of it.

As mentioned in the Martin Lewis article, if you are considering equity release, make sure you use a provider that is approved by the Equity Release Council. I am sure they have a no negative equity guarantee, meaning that the "horror stories" of the past won't apply.

Interesting articles I found:

www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11425680/Equity-release-mortgage-costs-fall.html

www.equityreleasescotland.org/faqs/what-is-equity-release-and-how-does-it-work/

en.wikipedia.org/wiki/Equity_release

asdf

Thankyou to you all for your replies and the tip on how to search the site.. There are indeed a lot of threads on this subject and they all (including martins money saving tips) say best left alone!

I am going to need some cash in the not so far future. I believe I am not old enough, or unhealthy to be given equity against my home!! Im not sure I could repay a remortgage.
I am glad I have checked this out early as it gives me some time to check out alternate routes

and if you can avoid it, I would not touch it with a bargepole.

MarySunshine if you type 'equity release' in the box on the top right 'SEARCH' it will bring up all the old threads/posts on the subjects.
I was going to do a link but there appears to be more than a couple!

A big - don't do it. It's not worth it.

If you need some cash, what about a remortgage?

This is a link to Martin Lewis - MoneySavingExpert.
www.moneysavingexpert.com/news/protect/2010/06/should-you-equity-release

Unless you are absolutely destitute, don't do it.

Years ago when these schemes first came out we sent for some info just to see what it was all about. OH Was utterly horrified at the relatively small amount of money you could borrow against the house value and how the interest built up until the whole value of the house was spent.
If you want to spend the value of your home and have nobody to leave it to it might be an OK idea but we decided they were a bit of a rip off.

I am sure that there was a thread on this subject a while ago. I think that most were in the "no" camp. A lot depends on age. I do not have personal experience.