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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:
PinkSparklyPussyCat · 29/12/2021 19:14

That's easy to say @Crankley but put yourself in my Mum's shoes. She'd lived in the house for nearly 50 years, it was a 2 bedroom semi so not much option to downsize and the chances are she wouldn't have been able to keep her pets, everyone she knew was in the area so if she moved it would have been a completely fresh start.

It's not always as easy as people think.

Offmyfence · 29/12/2021 19:16

@Crankley

I'm in my 70s and wouldn't touch equity release with a bargepole. If/when I need to release funds from my home I would rather downsize/move to a cheaper area.
And that's fine, but not everyone feels the same as you? Some people want to stay in their homes, give their children an early inheritance and see them enjoy it.

Low interest rates and escalating house prices, make equity release attractive at the moment.

But as someone who clearly has not taken the exams, not explored the options, you'd certainly know more than a qualified adviser!

Offmyfence · 29/12/2021 19:17

@PinkSparklyPussyCat

That's easy to say *@Crankley* but put yourself in my Mum's shoes. She'd lived in the house for nearly 50 years, it was a 2 bedroom semi so not much option to downsize and the chances are she wouldn't have been able to keep her pets, everyone she knew was in the area so if she moved it would have been a completely fresh start.

It's not always as easy as people think.

Exactly!
Helpfriend · 29/12/2021 19:22

Please read Martin Lewis as an independent source on equity release, many companies can be scams and there are some big downsides.

Not to say you shouldn’t enjoy your money, but please seek advice, from an Independent Financial Advisor (independent being the critical bit) before you make any decisions

ArblemarzipanTFruitcake · 29/12/2021 19:22

A question as there seem to be some knowledgeable posters here.

If you have no children and no one else to leave anything to, does it matter if you end up owing more than your house is worth?

Offmyfence · 29/12/2021 19:25

@ArblemarzipanTFruitcake

A question as there seem to be some knowledgeable posters here.

If you have no children and no one else to leave anything to, does it matter if you end up owing more than your house is worth?

Majority of lenders have a no negative equit guarantee
Offmyfence · 29/12/2021 19:26

*equity

So no, it doesn't matter

CrotchetyQuaver · 29/12/2021 19:48

I think you'd be better moving/downsizing to release cash tied up in your current house rather than doing equity release. That stuff is the work of the devil and yes I'm biased as my PILs were pretty desperate (sadly they were too proud to tell us their financial situation at the time) and were totally shafted. We only found out the real facts rather than what we were told when it was going through after my FIL died. In the meantime the house they paid £90k for and were given £65k for 3 months later on ER was sold for £225k about 10 years later and all that profit went to the ER company. I wouldn't consider doing it unless there really were no other options available.

Offmyfence · 29/12/2021 19:52

@CrotchetyQuaver

I think you'd be better moving/downsizing to release cash tied up in your current house rather than doing equity release. That stuff is the work of the devil and yes I'm biased as my PILs were pretty desperate (sadly they were too proud to tell us their financial situation at the time) and were totally shafted. We only found out the real facts rather than what we were told when it was going through after my FIL died. In the meantime the house they paid £90k for and were given £65k for 3 months later on ER was sold for £225k about 10 years later and all that profit went to the ER company. I wouldn't consider doing it unless there really were no other options available.
Work of the devil 🙄
Offmyfence · 29/12/2021 19:56

@CrotchetyQuaver

I think you'd be better moving/downsizing to release cash tied up in your current house rather than doing equity release. That stuff is the work of the devil and yes I'm biased as my PILs were pretty desperate (sadly they were too proud to tell us their financial situation at the time) and were totally shafted. We only found out the real facts rather than what we were told when it was going through after my FIL died. In the meantime the house they paid £90k for and were given £65k for 3 months later on ER was sold for £225k about 10 years later and all that profit went to the ER company. I wouldn't consider doing it unless there really were no other options available.
Except that was most likely a home reversion plan..
PinkSparklyPussyCat · 29/12/2021 20:21

I'm sorry that happened to your PIL @CrotchetyQuaver but downsizing isn't right for a lot of people. Did they take independent advice? I've heard of people getting screwed over but it really isn't the work of the devil if it's done properly.

In my Mum's case she could have downsized and been utterly miserable for her last 18 years but she took advice and chose equity release and stayed in her home until she died which was what she would have wanted.

SpellBounds · 29/12/2021 21:58

@Offmyfence

Finally some more words of reason!! I was starting to think I was the only one with any modern and genuinely informed views rather than harping on about plans taken out in the 80s/90s etc.

Confusedmeanderings · 30/12/2021 02:05

I think whether equity release is a good idea or not depends very much on individual circumstances. Like any financial product you need to do your research to find what's best for you and you need to take good advice. My parents did it and it worked for them, it made their later years more comfortable. My brothers and I all felt it was their money and so they should spend it. As it turned out, because of the rise in house prices, there was a sum of money left for each of us. Not life changing but a decent amount. My DH and I totally intend to go down this route. Sadly, we don't have children. My nephews and nieces have all been told that they're welcome to whatever is left when we die but they needn't expect it to be a lot because we intend to spend it all!

Offmyfence · 30/12/2021 09:08

[quote SpellBounds]@Offmyfence

Finally some more words of reason!! I was starting to think I was the only one with any modern and genuinely informed views rather than harping on about plans taken out in the 80s/90s etc.[/quote]
Exactly!

Didyousaysomethingdarling · 30/12/2021 11:08

Surely it makes sense if your house is worth more than £1 million, since anything you leave over that amount, as a married couple will be liable for 40% inheritance tax? Better to release equity and give it to your children early, especially if you live for 7 years thereafter.

Yants · 30/12/2021 11:09

I've just used the Aviva ER calculator, I don't know just how accurate their claimed figure is in reality but if I was 58 (so VERY young) with a house worth £150k I'd apparently get £35k.

Now if I was to free up £35k by downsizing I'd have to buy a much scruffier house requiring refurbishment in a pretty undesirable area, plus I'd have all my selling, buying and moving costs as well.

With no kids to leave any inheritance to do people still think that in my particular circumstances ER is bad idea?

ArblemarzipanTFruitcake · 30/12/2021 12:14

@Offmyfence

*equity

So no, it doesn't matter

Thanks @Offmyfence

To be honest if I did it and ended up in negative equity they'd have to write it off anyway - I can't see any distant relative I've never met rushing to repay any debts after my death.

BalladOfBarryAndFreda · 30/12/2021 12:17

You have way more options than you think. Don’t do equity release.

Offmyfence · 30/12/2021 13:15

@BalladOfBarryAndFreda

You have way more options than you think. Don’t do equity release.
Such a reasoned answer ...... not!
Offmyfence · 30/12/2021 13:16

@Yants

I've just used the Aviva ER calculator, I don't know just how accurate their claimed figure is in reality but if I was 58 (so VERY young) with a house worth £150k I'd apparently get £35k.

Now if I was to free up £35k by downsizing I'd have to buy a much scruffier house requiring refurbishment in a pretty undesirable area, plus I'd have all my selling, buying and moving costs as well.

With no kids to leave any inheritance to do people still think that in my particular circumstances ER is bad idea?

Oh course it's not, you spend the equity haw you like and get to stay in the property you like.
yoyo1234 · 30/12/2021 15:04

I would definitely downsize. Equity release appears to be for mugs .

Offmyfence · 30/12/2021 15:50

@yoyo1234

I would definitely downsize. Equity release appears to be for mugs .
What makes you say that exactly?
PinkSparklyPussyCat · 30/12/2021 16:22

@yoyo1234

I would definitely downsize. Equity release appears to be for mugs .
Really? Was my Mum for wanting to stay in her home when she was widowed? Has it ever occurred to you that downsizing isn't always an option? It's not easy when you have a two bedroom semi to start with!
HermioneWeasley · 30/12/2021 16:52

Equity release is very expensive. In 10 years time your lovely house could be a burden - expensive to maintain, hard work to clean, physically hard to get up stairs etc.

Another vote for downsizing and enjoying your money while you’re healthy

Offmyfence · 30/12/2021 17:31

@HermioneWeasley

Equity release is very expensive. In 10 years time your lovely house could be a burden - expensive to maintain, hard work to clean, physically hard to get up stairs etc.

Another vote for downsizing and enjoying your money while you’re healthy

What interest rates are they currently charging for equity release?