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Equity release help!

Discussion in 'Personal' started by Crystalsecrets, Nov 26, 2011.

  1. Ivartheboneless

    Ivartheboneless Star commenter

    My ex's parents did an equity release in about 2003 or so. Old man died in 2005, old woman about 2013, the company owning the reverse mortgage tied the house up in legal stuff for two years during which the debt got bigger (of course), and the two daughters got almost nothing. I wouldn't touch it with a bargepole. You have to ask yourself "who benefits?", and "who invented it and why?" when you appreciate the answers to these you realise the odds are loaded against you. There are still complications with care too, because if you took out one of these and gave the money to your offspring, even for something like helping them buy a house, the council can still claim it back off them as "avoiding care costs" even to the lengths of kicking your kids out of their house to pay care costs.
    lindenlea likes this.
  2. Lara mfl 05

    Lara mfl 05 Star commenter

    Well done for making that point ivartheboneless. An important one to make.
    Equity release is often 'short-term gain' for you, being able to 'treat yourselves', but 'long-term pain' for your family and potential inheritors.:( Depends how much you love your family I expect. ;)
  3. lexus300

    lexus300 Star commenter

    Whilst I am against equity release generally, there are schemes that allow you to pay the interest off each year. Those schemes that do this are probably the ones to go for if the need arises. I think couples or singles in later life might be quite in order to go for equity release if it makes their lives better than they would otherwise be. Inheritance might be an issue for those who have an eye on their parents equity but should that be a deciding factor?
    “You pays your money, you takes your choices” ;)

    There is always the possibility of selling your home and downsizing or even renting which might be a safer option.
    Lara mfl 05 likes this.
  4. florian gassmann

    florian gassmann Star commenter

    Indeed so. . A lot of people don't seem to realise that if nursing care is needed, a very mediocre care home is now likely to average £40,000 a year: more like £50,000 per annum in the South East and very much more than that, if something half decent is required.

    The best way of using property to offset this outlay is to rent it out, although that will usually only cover a part of the cost and, if you are in a care home, it will require the expense of a property management company to handle the rental and repairs unless there is a son or daughter able to do that for you.
    Lara mfl 05 likes this.
  5. Ivartheboneless

    Ivartheboneless Star commenter

    I would doubt that someone taking out "equity release" would have the funds or income to pay off the interest every year. If they had such available money, what would be the point of the whole scenario? Surely the whole idea is to get people some money when they feel they don't have enough!
    Lara mfl 05 likes this.
  6. lexus300

    lexus300 Star commenter

    That is probably a sizeable proportion of those that do go for equity release but others who have decent pensions or perhaps a small salaried income may want to set their kids up or have a few of life's luxuries using some of their equity.
  7. Ivartheboneless

    Ivartheboneless Star commenter

    So you don't agree that equity release would be a stupid way of doing it then? Or did you just want the last word?
  8. anotherauntsally

    anotherauntsally Lead commenter

    Maybe you’re the one looking for the last word? As people over a certain age are usually unable to get an ordinary mortgage, equity release may be the only way they have of being able to help out their offspring. Lexus pointed out that it’s possible now to make regular interest payments. If I was taking out a large loan, I would certainly make sure I would be able to afford to do that. I doubt the monthly interest bill would be huge - much better not to let it mount up. Would anyone who couldn’t afford to keep paying the interest not be better thinking about downsizing?

    Some schemes allow a percentage of the capital to be paid each year, so borrowers even have the option of reducing the size of the loan over time. That must be an improvement on the original equity release schemes. BertieBassett was asking if these schemes had become more responsible. That would seem to show that some of them have.
  9. peakster

    peakster Star commenter

    Go and rob a bank - less risky than equity release.
    Ivartheboneless and Lara mfl 05 like this.
  10. lexus300

    lexus300 Star commenter

    It is not for me but I can see that some might find it useful provided they are careful. I do not understand why you are being sarcastic but if that is your way so what?

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