Using equity release to buy partner out of home

If you are talking about a lifetime mortgage where you do not make regular repayments then I would strongly advise against it at your age if you are talking about having to borrow a large sum of money, which it sounds like you might be to buy out a 50% share.

At say age 68 you can typically borrow 35% of the value of your home so you probably wouldn’t be able to fund a 50% buy out with equity release anyway.

The compound interest would be punitive. Current rates are 6.50% to 7.20%. Anything over 6% is considered toxic. Rates are usually fixed for life but some lenders may let you renegotiate if rates come down substantially.

Let’s say you are 68. If you borrowed say 100,000 now at 7%, by the time you are 78 you would owe over £210,000. By the time you are 88 you would owe £415,000. At 98 £815,000.

The debt is capped at the value of your home but you could easily find yourself losing all the equity and in a position where you cannot move house if you need to as there’s nothing left to buy another place. Lenders will sometimes transfer a debt but you see the problem if you wanted to downsize in older age.

Equity release is predicated on the notion that the increase value of your home will outstrip the debt. That’s unlikely to happen unless values rocket beyond what’s being charged as compound interest.

Please be very wary

We used equity release to finance an extension, but we paid the interest rather than let it mount up. We also redeemed it after 5 years when we down-sized.

Teila You do not say whether you are married to your partner, or are you just cohabiting? There are legal ways of asking your partner to move out, without paying him lots of money.

I think your best first step forward is to go and see a solicitor specialising in marriage/divorce/ living together and discuss the situation with them. They will know of a whole range of alternative solutions that you know nothing about, including financial solutions.

A good friend of mine was able to get a mortgage at 65, this enabled him with savings to get a property, he didn’t have a large income but the repayments were roughly the same as his rent, could you remortgage the home perhaps

If you pay the interest then you just have the capital sum outstanding. You can move house and transfer the debt but the current capped rates are prohibitive.

I had a similar situation and enabled him to raise a new mortgage on a new property, using the existing house as a guarantee/collateral. He had sufficient pension income to raise a 10 year mortgage. But if you dont feel the need to pass on cash to others- and why shpuld you? - sounds like it could be a good idea, if you can afford the bills. It does mean youd probably have to stay in that house; equity release lets you live there to the end, but would it be ok as you get older? I ended up selling as everything cost so much & i couldnt see myself living there in old age.

You need to talk to a financial adviser who is also a qualified mortgage broker. Do not take equity of the house.

Humbertbear

You need to talk to a financial adviser who is also a qualified mortgage broker. Do not take equity of the house.

This seems like the best advice.
I would be wary of Equity Release Agreements

Cossy

Please be very wary

This isn’t accurate. If a good, reputable lender is used, you can port the loan and buy another property. They have improved a lot in recent years.

I had equity release,not for the same reason but to give my youngest son a good deposit on his house, all three of my children have had deposits for their houses
They are quite happy to accept there might be nothing left when I die unless I die quickly, who knows what will happen.🤷‍♀️.
And I won’t be going into Care, whatever happens…
So I have helped all three children onto the property ladder and I’m quite satisfied with things the way they are…

Equity release when it started was a cowoys joy. But it is now fully regulated and a safe option, as long as you fully understand what you are committing to.

But that applies to any financial product from mortgages to pensions. The rule is: never commit yourself to any financial product you do not fully understand. I have friends who have taken equity release and many years in are still quite happy with their decision - but knew and understood what they were signing up to.

You will only be able release 30-50% of the value of your house in equity release, depending on your age and health. It is best if you can delay taking it out until your late 70s - 80s because the earlier you borrow the more the interest ramps up.

Thank you all for your comments and assistance. Have been writing them all down and then can start investigating. Really appreciate it. xxx

First thing I would do is go see a solicitor. Consider becoming Tenants in Common. Are you married or living together. Whose name is on the mortgage. If everything is in your name then issue him with a Notice to Quit. File for a legal separation

Would it not be simpler to sell up and split? A fresh start in a new home might be better for both of you?

Could you bear to be neighbours and actually split the house into 2 flats?

I agree that legal advice should be a first step.