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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think about Equity Release

203 replies

papayaorange · 28/12/2021 13:40

My husband and I are mid 60's. We live in a large house we both love but are asset rich and cash poor. I suggested that we release a bit of money from the house which has a lot in it, so that we can buy a new car and have some good holidays. We only have our state pensions and a small company pension. My husband is dead against it as he says it is spending the children's inheritance. What would you do.

OP posts:
AhNowTed · 28/12/2021 14:48

I don't trust equity release one bit.

OP we are in a similar situation.

I'm mid 50s and DH is 60 next year when he wants to retire.

We will downsize in a year or so.

This will give us a lump sum to live on/supplement our pensions.

The house we downsize to will then be our kids inheritance (if it's not eaten up by care bills).

Companies sell equity release for one reason only, and it's certainly not to benefit you.

campion · 28/12/2021 14:55

Follow the sensible advice on here and don't touch equity release schemes. People voting that you should probably know nothing about them.

Downsizing and investments are a much better option but you do need to get impartial, professional advice.

TheHoptimist · 28/12/2021 14:59

Speak to your children
We would all rather take out a loan that have equity release on our parents home. The may feel the same

(I know there may be care home fees but in reality unlikely due to situation of parents)

IncreMental · 28/12/2021 15:18

The problem with equity release is that the interest payable on the sum released compounds, and re-compounds, so that the amount ended up owing can be many times the original sum released.

This can be avoided if you treat the sum released like any other loan or mortgage, and pay the interest monthly - if you can afford that.

This can be be useful for people who cannot get another type of loan or mortgage - provided that you can cope with an extra monthly outgoing.

If you don't want to downsize, and you are eligible for other loans, then it would just be a matter of comparing interest rates. Bear in mind, with interest rates likely to rise significantly, that the interest rate on equity release 'products' is fixed permanently.

Clarice99 · 28/12/2021 15:19

@Bavarois

Nobody in entitled to an inheritance, live your lives and spend your money!
This. 100%.
Viviennemary · 28/12/2021 15:22

Equity release is a poor financial decision for most prople. Downsize instead.

mumda · 28/12/2021 15:25

Get your house valued and start browsing rightmove.
You might discover your house allows you to 'downsize' to something else and have cash in the bank.

SantasCat · 28/12/2021 15:28

A relative of ours did equity release without seeking advice professionally or from family and now basically the company owns the house although they can live in it till they die. The house will then be sold and proceeds belong to thr equity company. They received 20k. The house is worth around 100k. They really didn't know what they were getting themselves into. The interest just multiplies and multiplies. This was a well known company. Think carefully before you get involved with this. You'd be better downsizing if needbe.

TooOldToBeAGoth · 28/12/2021 18:01

Please don’t do this. Awful idea

Beebopawhop · 28/12/2021 18:04

My parents are going to do this to help my brother out as he's in debt etc I would go for it why not I don't need anything from my parents and you have worked hard all your lives you deserve it tell your husband this and the kids don't need anything ! Enjoy your life it's too short z

Yants · 28/12/2021 18:16

Surely Equity Release can make sense in some situations?

i.e if you have no kids so no concerns over depriving them of an inheritance and if you already live in a small, modestly price house so downsizing isn't really an option.

Igmum · 28/12/2021 18:22

Sorry for your loss OP. Absolutely agree with PPs on being cautious about equity release and ideally avoiding it like the plague. If you desperately want to stay put it is now possible to get mortgages in retirement. That way you still own your home but yes, downsize if you want to release the equity. Examples of these schemes benefitting the people involved are few and far between

Sometimes123 · 28/12/2021 19:35

Your 60's is very very young to be doing this in my opinion. Take some independent financial advice before doing anything, as you could end up paying a terrible amount of interest. The longer you live, the more interest you'll pay. You could end up living until 90, and yiur family might have to give up the house to the equity company on your death....and by then it's unlikely you'll have anything else to show for it. Perhaps consider selling up instead and downsizing? Then you'll keep 100 % of your asset, and can enjoy a nice car and some lovely holidays with no regrets?

RandomLondoner · 28/12/2021 19:37

When I looked at equity release a long time ago, it did not make sense at less than about age 75.

SpellBounds · 28/12/2021 19:40

Omg OP stop reading this thread there is terrible advice!! 😫 equity release is no longer (and not since the 90s) a de regulated free for all. And home reversion is totally different to equity release. AND downsizing is often more expensive with little reward when you factor in all costs.

Get some proper advice. Bear in mind high Street names such as Nationwide Building Society now offer this - tending to now use the phrase "lifetime mortgage" rather than equity release. Good luck OP but it seems lots of these posters are stuck in the 90s.

RandomLondoner · 28/12/2021 19:41

Even at age 75, most equity release schemes were poor value for money. Only desperate or financially naïve people would sign up to them.

tillyandmilly · 28/12/2021 19:42

We took out equity release - no kids - we needed to extend our lease on our flat before we sold it - which cost us £58,000! We are low earners and one of us is in their 60’s - no way would we have got a mortgage!

SpellBounds · 28/12/2021 19:42

@SantasCat

A relative of ours did equity release without seeking advice professionally or from family and now basically the company owns the house although they can live in it till they die. The house will then be sold and proceeds belong to thr equity company. They received 20k. The house is worth around 100k. They really didn't know what they were getting themselves into. The interest just multiplies and multiplies. This was a well known company. Think carefully before you get involved with this. You'd be better downsizing if needbe.
Thats not equity release its a home reversion plan.
SpellBounds · 28/12/2021 19:42

@mumda

Get your house valued and start browsing rightmove. You might discover your house allows you to 'downsize' to something else and have cash in the bank.
Plus stamp duty, legal fees,moving costs, loss of good neighbours, decorating costs etc etc etc
SpellBounds · 28/12/2021 19:43

@campion

Follow the sensible advice on here and don't touch equity release schemes. People voting that you should probably know nothing about them.

Downsizing and investments are a much better option but you do need to get impartial, professional advice.

Or they're a financial adviser like myself who know and understand all options.
PegasusReturns · 28/12/2021 19:43

Regardless of whether you want to leave an inheritance, equity release is not the way forward.

Far more sensible would be to downsize to a smaller property and spend the cash freed up.

SpellBounds · 28/12/2021 19:44

@Hankunamatata

Isnt equity release a bit of scam game? Basically you get a small amount of money and they get whole house? If def seek financial advice. What happens of money runs out and then you have no asset to sell as they won your home though equity release? Also think you cant sell or downsize without huge penalties
No no no not at all. Goodness me people need to do their homework.
SpellBounds · 28/12/2021 19:45

@SmallElephant

The companies that run these schemes don't do it out of the goodness of their own hearts! But you could say that about any financial product - house insurance, life insurance, critical illness etc. That doesn't mean you shouldn't purchase any of these.

It may be a suitable product for you OP, but it's worth seeking independent financial advice.

Sensible remarks at last.
RandomLondoner · 28/12/2021 19:47

Get some proper advice. Bear in mind high Street names such as Nationwide Building Society now offer this - tending to now use the phrase "lifetime mortgage" rather than equity release. Good luck OP but it seems lots of these posters are stuck in the 90s.

Yes I think the market has got a lot better since I last looked at it. The lifetime mortgages are a much simpler and better approach. But are there any with interest rates of 3.5% or less? Because I would regard any higher as poor value. My recollection is that they have much higher rates. If the rate is say 5%, that doesn't compare well to the 1% five-year fixed rate someone I know has just go on a conventional mortgage. (A working person, to be clear.)

SpellBounds · 28/12/2021 19:49

@RandomLondoner

Get some proper advice. Bear in mind high Street names such as Nationwide Building Society now offer this - tending to now use the phrase "lifetime mortgage" rather than equity release. Good luck OP but it seems lots of these posters are stuck in the 90s.

Yes I think the market has got a lot better since I last looked at it. The lifetime mortgages are a much simpler and better approach. But are there any with interest rates of 3.5% or less? Because I would regard any higher as poor value. My recollection is that they have much higher rates. If the rate is say 5%, that doesn't compare well to the 1% five-year fixed rate someone I know has just go on a conventional mortgage. (A working person, to be clear.)

Most rates are now between 2%-5% and most places no fees now too. It can work fantastically well for many people and is essentially just a flexible mortgage these days.
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