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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To consider buying parents out of equity release

79 replies

Sonrien · 12/04/2023 10:27

I've just found out my parents have taken out an equity release on their house.

It's for a really small amount but at a very high interest rate, which would see the proportion that the equity company own escalate from 1/5th now to pretty much all if it within 20 years. There's also a big early repayment penalty.

In principle I would like to help them get out of this so they can keep some house equity for future care/inheritance etc. However I'm also nervous to get involved in their crazy financial situation- they have no pension savings, believing the state pension will be fine - but are still spending all their income in their last few years of working- eg going on weekends away, cruises, buying a new car on HP etc.

I'm really not sure whether helping is an investment or a risk. (Aware there'd be legal advice needed and legal documents for buying a portion of house etc).

YANBU - help them if you can as you'll keep the house in the family

YABU - leave them to it - to much stress, risk and unpredictability

OP posts:
Tealsofa · 12/04/2023 10:32

Don't do it!

If they are not financially aware, they'll do it again and again

future care/inheritance

You can pay for care if you want, but why gamble on an inheritance with your own money

JudgeRudy · 12/04/2023 10:39

I wouldn't get involved. I also wouldn't expect an inheritance.

You might view their lifestyle as crazy but it's their choice. My parents didn't save for their retirement. The house was paid, but that was about it. They had 2/3 holidays a year, and socialised a lot, separately and together. Dad died shortly after retirement so Mum's glad they 'spent it whilst they could'.

Littleroseseverywhere · 12/04/2023 10:41

I’d leave them to it. You can’t teach and old dog new tricks , they will just continue with their poor financial behaviour, you need to look away

Somanycats · 12/04/2023 10:45

I would buy them out. Relatives did equity release for a car purchase a few years ago, obviously it has multiplied and they now own only a small proportion of the house. The elderly lady has had her legs amputated and they need to move to an accessible flat. But they simply won't have enough left after the sale of the current property to buy one. So they have given up on the sale and the husband will continue to live there and she is having to go into a care home. It's so sad.

Daisyoo · 12/04/2023 10:46

They might not be bothered about inheritance. They sound like they are living for now and not the future. I'd leave them to it.

Crabwoman · 12/04/2023 10:47

I'd stay out of it. Sounds like they will continue to make poor financial decisions and if you help once, they may expect it again.

GasPanic · 12/04/2023 10:50

In a common sense world you would bail them out and they would rein in their spending.

In reality it sounds like their spending is out of control and they completely lack the ability to make good financial decisions.

They are probably not going to change their behaviour, so any financial involvement with them is best avoided.

Original poster
Sonrien · 12/04/2023 11:15

Thank you all - I've been beating myself up about this and it's impacting on my sleep. So true about the 'in a common sense world' comment. It feels quite selfish to not step in if so can. But also I think it would be really difficult to not be even more Shock about their financial choices if I was in some way tied into it.

OP posts:
missingthewinchesterboys · 12/04/2023 11:20

Don't buy them out.

My DH's mother and stepdad were appalling with money, they ran up debt after debt, took loans, finance, CC etc. it was unbelievable the money they got their hands on. They were scammed so much. Calling he lottery lines on daytime tV spending £1K on trying to win a holiday they could never have physically gone on even if they won.
Finance on a 'new kitchen' that was absolute trash and didn't even look like a new kitchen.
Both living on meagre pensions and DLA I have no idea how they were given the loans or CC allowance they were.
Twice their kids stopped them doing equity release, they saw the paperwork on a visit and DH walked in on on the hard sell.
DH made himself sick sorting out their debts. He stopped them having CC's, talked to the companies about repayment schemes, got some debt wiped out etc. it took a good few years- THEY DID IT ALL AGAIN, went behind his back an got another credit card and loan.
The cycle only stopped when they had to go into care and could no long spend £50 a day on CC in the corner shop on fags and booze.
I actually had to stop my husband getting a loan in his name to pay off their debt. It was such a mess.

In the end, having never expected to have anything but debt to pay when they died there was actually some inheritance from the house sale. My DH had worked so hard on getting them straight. We thought the care fees would wipe everything out but they both died sooner than he'd budgeted for if that make sense.

I may sound callous but his mum was a terrible parent, alcoholic who chose herself every time, took, took, took and never gave. Screwed with all the sibling self esteem and trust their whole lives.

Do not bail them out with your own money.

Mirandawrongs · 12/04/2023 11:23

We had this within my family, my uncle ‘sold’ 10%.
my cousin tried to buy it back, the company refused.
no conversation, just no.

HangerLaneGyratorySystem · 12/04/2023 11:50

It sounds quite frightening - basically they've given their home away already in order to enjoy the cash now. But if you help them, you're basically giving them even more cash to spend. Things will be bad enough as it stands with the way they are carrying on without you throwing money away too. I'd be ashamed if I did this and one of my DCs was asking this question on MN. I think the only (possibly) helpful thing you can do is recommend they get financial advice.

Otherlifeform · 12/04/2023 11:52

Don’t get involved. If they are anything like my PiL they will expect you to bankroll them.

Similar situation to that upthread. PiL refused to sell when they could. MiL in particular refused to give up the house.Took out two of these loans. Both became disabled and couldn’t move to appropriate accommodation as no equity left.

FIL went into posh care home paid for by his son and daughter. Then died. MiL stuck at home. Can no longer use garden/stairs/bath and got grant for adaptations (in ROI not UK). House is falling apart, central heating, wiring and plumbing all fucked.

House is worth a lot as in a great location but is effectively owned by the bank. Will likely be sold to a developer and made into holiday flats. This upsets MiL a great deal but she brought it on herself.

JimmyDurham · 12/04/2023 12:02

Leave them to it. If you "help" and they continue as things are you could well lose both your savings and your inheritance.

ShagratandGorbag4ever · 12/04/2023 12:12

That would be a lovely gesture if you can afford it, but there would be nothing to stop them doing the same thing again. I think you have to accept that they are spending their money while they have it and are fit and mobile enough to enjoy doing so, and wish them well.

Original poster
Sonrien · 12/04/2023 12:40

Amazing advice. I really appreciate your comments thanks all. @missingthewinchesterboys so sorry that you have had this experience. That's what I fear would happen.

OP posts:
youhavenoidea123 · 12/04/2023 12:58

I would love look to help them out if I was in a financial position to do so. I would seek legal advice, if I could secure the amount in a deed trust or similar I'd definitely do it. I imagine this would make the house less attractive to equity release schemes in the future.

I would be worried that they will be more of a financial burden in the future if they have no equity in their home.

youhavenoidea123 · 12/04/2023 12:59

*look to help them

pussycatinfluffyslippers · 12/04/2023 13:02

YABU

They're spending it faster than you can ever repay it. Leave them to it.

pussycatinfluffyslippers · 12/04/2023 13:05

Oh, and just one comment about the "Equity release" adverts.

If I were stupid enough to do ER, I wouldn't be wasting money on the house. The bank owns it now, so why pay for new windows, new kitchen, new bathroom etc? Spaff the lot on a holiday for you but don't waste a penny on the roof over your head that you no longer own 🤷‍♀️

Ireallycantthinkofagoodone · 12/04/2023 13:40

@pussycatinfluffyslippers

I couldn’t agree more - unfortunately, many people see the glossy ads on TV, and are completely taken in. They are such a con!

Hankunamatata · 12/04/2023 13:44

They made the decision to take out the equity release without discussing with you. I wouldn't step in

DelurkingLawyer · 12/04/2023 13:53

I’d be very concerned that they would gratefully accept your cash to buy out the equity release and then just enter a second equity release behind your back.

Ffsmakeitstop · 12/04/2023 13:59

I did look into equity release for us. I am 65 and work 35 hours. DH is retired but our mortgage doesn't end until I'm 70 obviously my job has to keep me but I don't know if I can physically do it that long.
The first calculation I got estimated we could get £90000. We owe about £37000. When I checked again the figure was nearer £60000. Just not worth the risk.
So my plan is to cut a day when I finally get my pension and overpay the mortgage.

L1ttledrummergirl · 12/04/2023 14:03

pussycatinfluffyslippers · 12/04/2023 13:05

Oh, and just one comment about the "Equity release" adverts.

If I were stupid enough to do ER, I wouldn't be wasting money on the house. The bank owns it now, so why pay for new windows, new kitchen, new bathroom etc? Spaff the lot on a holiday for you but don't waste a penny on the roof over your head that you no longer own 🤷‍♀️

The same when you have a mortgage. Until you own it, why pay to add value to the banks asset.

Nowtnorsummat · 12/04/2023 14:03

Struggling with something similar. The bottom line for me is I cannot afford to help, which is a bit of a relief as I don't feel beholden to do it if that makes sense. The choice is ultimately if you can afford to fund them then consider it, but if it will leave you financially disadvantaged then don't.