To consider buying parents out of equity release

[Sonrien]

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

Lots of food for thought thank you for all your comments. I appreciate your time, thoughts and experiences. The ER amount was to pay off the balance they owed the bank (as they'd taken an interest only mortgage).

If I did it would definitely be tenants in common with a % of the house.

I hadn't considered the issues with downsizing in the future if the house gets too much. I suspect I'm going to end up helping out in the future whatever happens. And im invested in keeping them independent- def don't want to end up with one of them trying to move in 😱.

Im definitely leaning more towards staying out of it all. Thank you again!

My in laws are now asking for financial help with a stair lift , drives me nuts , they should have downsized years ago .I feel if I help again they will be back for more at some point and its just good money after bad

I do understand why people want to stay in their homes and not downsize but they must make provision for it and not expect younger family members to bear the financial burden. I’d worry about them using equity release to put a stair lift in but I also wouldn’t be happy about paying for it. They need to make you part owner of the home or something, then they can’t do ER and you are investing in your own asset. I’m not a lawyer so obviously an expert needs to advise.

That would piss me off.