Equity release...Yes or no?

Eglantine, I am absolutely with you every step of the way.

It’s a very emotive subject, but actually I don’t see why a person’s assets shouldn’t be used to pay for their care.

After all, somebody has to pay. Why should the state have to take money from people who are earning say £20,000 a year to pay for the care of someone who has £200,000 sitting in a house?

When I need it I’m fully intending that my house will be sold to buy me the best care available. If I want to stay in my house I’ll take equity release to fund that. If there comes a time when all my money is gone then I’ll be grateful for a Welfare State that won’t let me die on the street.

But I don’t expect your son or daughter to pay taxes so that mine can inherit!

I wish people who think care should be free no matter what you own would explain why they think that’s fair.

It’s understandable that some folks want to leave their property to family however have you thought that family will not inherit should you’re parents need to go into a care home. (Scotland)

I’ve been to court twice now to apply for Guardianship and the judge said half of the persons capital will be taken into consideration however it will be disaplied while the other half continues to live there.

Once both parties either go into care or die their property will continue to pay for the remaining persons care needs.

It’s no good saying the property has been transferred into the offsprings ownership because the LA can go back many years and will if they think someone has done this with intent to avoid care fees.

What have we to do?

It was around the time he retired and they redid the kitchen, had a really good holiday and he got a new car. He only told my brother and myself just over a year ago when we were trying to get them to move into a retirement flat to make it easier for him to care for Mam who has Parkinsons and he was refusing outside help. Both of them had to go into residential care at Christmas then he died in March so now the house has to be sold and my brother who has POA for Mam is trying to sort it all out with the bank who did the equity release. He told us at the time his investments(!) paid for it all!

HAZBEEN, that is a shock. Do you know why he took the loan? I think some people make decisions that are good at the time, but circumstances change.

Yes MOnica there are some horror stories about it from a few years ago. My Dad took £25000 out in 2000 now when we need to sell the house to fund Mams care it has risen to over £78000! This is mre than half the value of the house. The family were not aware until recently that he had done this and he was always very switched on (we thought) about finance etc and used to lecture us on living within our means, dont take out loans and such like.

Yes lots of advice .the companies are highly regulated now not like it used to be and it is a matter of personal choice , you can get a company o offer an illustration of how the balance would increase over the years and no repayments to make .The other point is the home would not have to be sold until the second person dies. there are some benefits t possible Inheritance tax [if applicable] Little knowledge is dangerous , so look at your options too many people have not sought out all the options. My background is a retired branch manager of many years for one of the largest financial services groups so check out all options

That is too sweeping a statement driverann. When first introduced equity release was a very blunt instrument and there were horror stories, but over the years products have been modified, honed and supervised. It is simply a question of taking good financial advice before you make a decision and making the type of mortgage you take out appropriate for your current needs and future requirements.

Equity release has got to be the scandal of the future being allowed to day. Stay well away from it would be my advise.

A wealthy friend has used the lifetime interest-only mortgage option, to, hopefully, reduce the amount of inheritance tax that will need to be paid on her estate.

Her DD and DGC have had desperate housing problems. She has taken out an interest-only mortgage on her own home so that she can buy them a home while she is young enough to reasonably hope she will live 7 years so that the gift falls outside the inheritance tax rules. When she dies the mortgage will be repaid from her estate thus reducing its size and the amount of inheritance tax due.

I agree Jane 10, its a very viable option.

My friend involved her solicitor. All approved by her. I sound like an advert for equity release! Sorry. Its just that it's been such a good way ahead for my friend.

Some Solicitors have information to read , I believe you can also have a quick chat on the basics without charge.

You don't have to release the whole value of the house. The equity release is 'portable' too so my friend can downsize whenever she needs or wants to.

A friend who is a lot older than myself took out equity release a few years ago but her health has deteriorated, the house is too large and there is insufficient money to move. I personally would try to look at other ways to acquire the cash required.

A friend has recently taken a little equity release from her house. She has no one to inherit and is unhappy in her work. The amount she's raised is going to be used to subsidise her going part time at work. She's a smart cookie who works in finance and did a lot of homework before committing to this. I reckon it's a good thing for her to do but not necessarily for everyone.

A friend took money from her house in the form of an interest only mortgage. If you can manage the mortgage interest each month, it gives you the best of both worlds. You take the money from your house but the debt can never arise above the initial mortgage. We have been discussing this with an advisor. If you move you either take the mortgage with you to the next property or pay it off.

As I understand it interest is charged annually and there is a charge put on your home. Obviously the amount increases the longer you live with interest on the interest also being charged until death or that debt is paid by some other means. If you live a long time after the equity release then the Equity Release Company may lose out in the end but that is the gamble they take and they do make calculations to ensure they get it right and don't lose their shareholders' money. They are in business after all.

One of my neighbours told me that she took equity release because she had no children and her only living relatives were nephews and nieces who were not interested in her. She did not want to go in to a home so she took the most cash that she could release and used it to fund the carers she wanted and recently died at 93. There was very little equity left for the family but I feel that was a good use of the scheme because she bought peace of mind and the enjoyment of her own home to the end of her life. I wouldn't do it myself as I have DC on whom I can rely and I would want them to inherit my assets to help them and their own families.

As Oopsadaisy says a loan of some kind is the better way to go. After all if you need to move for some unforeseen reason you may not be able to if the equity has been reduced beyond what you would need to purchase another property. You could always rent but it certainly cuts down your choices.

Horses for courses once again!

Another thought, there are lenders who will give you a normal mortgage up to the age of 80 if that helps.

I think that the usual advice is try to sort it out some other way if you possibly can. Failing that read everything very, very carefully and remember the lender is not doing you a favour they are making money (a lot) from you!

I think I would try to get a bank loan or small mortgage rather than let someone else have a stake in my home.
It might be worth talking to your family about it,as I think that the Equity Release companies take a proportion of the value of the property upon your death.
As you can tell I have only read the doom and gloom stories about this, but it would be interesting to hear a positive story.
At the end of the day, read the smallprint very carefully.