Has anyone used equity release for retirement?

[Lilyflame]

I’ve only heard horror stories from the old days where people ended up owing more than the house was worth
ive spoken to one company and it sounds like its doable. I just don’t want to get ripped off

This is all worrying. A relative has done this and is now EOL. Me and DC are the only beneficiaries, and I'm Executor. Inheritance doesn't bother me, but having to deal with this kind of aftermath does 😲

my DH owns our retirement flat and It’s ground floor, has a private garden and in the 10 years he’s owned it there was over problem when a tap burst upstairs. Very quickly death with. It’s only ground and 1st floor, quiet block in a housing estate and 60m a a a bus route. Shops, dentist and gp etc within 120m. Perfectly acceptable to be honest and I do not get the snobbery. When we’re retire, I am not going to be home 24/7 !

Yes I am looking into it to give my son a house deposit so he doesn't have to wait until I am dead

It’s not a scam but it isn’t a magic bullet either. You need to get a good understanding of compound interest and how it works before doing anything. The sales people are on big commission so are hardly going to tell you the downsides so get some independent advice even if you have to pay for it.

Yes I am looking into it to give my son a house deposit so he doesn't have to wait until I am dead

@Lidre I am the executor and sole beneficiary. I have also come across others in the same situation. One was able to take a loan to cover the cost. It only works if the property price rises over the life of the deceased and the property is saleable. Is this current market, it's a fucking nightmare.

Who would take out a mortgage to pay off a mortgage? The existing mortgage will be a much better deal and can be changed. Do dc realise that money borrowed today is a big debt on death? They might like to think about consequences.

You urgently need professional advice. Not just “speaking to an IFA” but actual paid legal advice from a lawyer. You can probably charge it to the estate. Unless you co-signed the loan there is no way you are personally liable or will be driven into bankruptcy but the loan company might want you to think that you will be so you repay them out of your personal funds. I strongly advise you to engage a lawyer tomorrow.

But you’d still have had to do that anyway until the house sold. With my DMs house, I was able to get insurance and only visited monthly. It was no hassle.
As for the interest rates, that’s not a reason NOT to take out ER if it makes the quality of your remaining life better.

In that case, you’ve priced the house too high. Equity release is a charge against a property. It does not transfer to someone else upon the death of the person who took it out in just the same way that a regular mortgage doesnt transfer.
If the ER has increased to the full value of the house, then it’s possible to transfer ownership of the house to the ER company.

I don't understand this, were you guarantor or something. Have you seen the original paperwork. Was the house in parents sole name?

As per my post below about my relative- I think people do need to know things have changed a lot in equity release in past 10 years- it’s a lot more structured and there are way more varied options ( and no I’m not in the industry but do know a fair bit about it) as I mentioned there are options for drawdown as required, paying the interest , so capital outstanding remains the same, and rates with the big boys like Kegal and general and RSA are only slightly above mortgage rates - find a good totally independent adviser ( they have to declare ) who specialises and ask for varied options. As I said I think age is a biggie, as is amount of equity and it’s something you should always make family aware of in my opinion

My in laws did it, and it was a terrible mistake.

I thought this is what happened, we bought our house at auction (not ER just last resort ro previous owner) the auction company said alot of the properties were the ERs as they just want the money.

And you need a note from your mum, as well.

Well that wasn’t the same for us We had to go weekly and provide details of viewings , why we were t accepting offers etc.

I knew an old neighbour who was a real character. She kept her nephew in the dark as he was only holding on for an inheritance from her house. She had used her house to release equity and was enjoying casino nights bingo and meals out. She thought it was hilarious and only wished she could witness his reaction when he discovered the truth. 🤣🤣

My mother has done something like this, or we thought she had. She borrowed £10k against the house a few years ago to get private surgery. She couldn't get it done, has gradually spent the money and has just told us that if she's still around in 3 years time, she has to find £25k to repay it. Don't know whether to laugh or cry.

No, I didn't know about the ER until after the death. The contract is legally binding.
The price has been dropped by several £100,000 over the year but the market is stagnant where the house is. There are 5 properties on the market in the village and none have sold in the last 18 months.
I thought it was a charge on the property at first and the company had to wait until it sold but it's not and as executor and sole beneficiary the contract signed made me liable.

The contract may be legally binding to them but were YOU aware of this? If you didnt sign to say you were aware as sole beneficiary then I really cant see how that would hold in court?

You cannot enter a contract if you knew nothing about it???

Is there any other money/estate? What has the will solicitor advised? Have you looked into disinheriting yourself if there is nothing else?

Don't believe all you read on here. A properly qualified mortgage advisor who has an extra qualification in equity release is the person to speak to. The products today are highly regulated with many safeguards for the borrower. A genuine advisor would always look at all the alternatives and encourage the client to involve family members in the discussions as well as ensuring a client took independent legal advice before committing to anything.

Equity release does have a place alongside downsizing. There is no interest payments so the debt doubles every 11-12 yrs. all products come with a no equity guarantee. This means you can never owe more than the property is worth. Some people are using to supplement their retirement income or using it to extract money to gift to children. Under 7 yr rule this is free from inheritance tax. Always seek independent financial advice as each persons situation is different.

People buy them and rebuild them as two storey family houses. Often the plots are quite big.