AIBU to wonder why a pensioner struggling financially would not use housing equity?

[Powerbungalow]

I'm not being unsympathetic

Theres a lady on the news at the moment, saying how times are tough and shes only cooking one meal a week - imagine she's eating cold food.

One thing that stood out though "I own my own house and it costs in maintenance" Depending on where she is, would you not get a life time mortgage or sell and rent? She has a big asset, why not use it to have a better life? I know I would.

She may be holding on to it for inheritance, but she didn't say - if so, then can her family help. It just seems totally crazy

Anyone should be wary of signing over your home to someone else to release cash

renting insecurity isn’t worth the risk

selling costs, and the stress of it can be too much for older people

I can definitely see why she wouldn't want to move house. It's extremely stressful and costs a lot of money in itself. As for the other option, who knows. I guess they just wanted a news story about someone struggling and this was the first one they found?

Many reasons, moving at one of the more vulnerable times of your life, leaving a support network can be incredibly difficult.
People worried by the time they have sold, paid fees etc that their money wouldn’t be enough to last them if they live longer than expected.

Biggest con going.

From my perspective selling and renting means you lose all security. Any day that letter can arrive telling you you've got however long to find somewhere else to live.

Equity release is awful and if she wants to leave anything for children/grandchildren, equity release will eat up any profit left in her home.

It may also have been the family home and she can't bear the thought of moving somewhere else.

Because it’s the certainty

no matter what happens no one can make her homeless - it’s a mental state

they can turn electric and gas off
but she still has a home

it seems crazy to me as well, also that she had years to think about money as you got older, the maintenance on your property and income in retirement. But they were her choices. If she chose to stay in an expensive to maintain property, spent everything whilst she was younger, didn’t save, I guess people think the state will bail them out every time. This I can’t understand.

But wanting to continue to solely own your house I can.

We would need to know a LOT more about the house, its size, value, saleability, re-mortgageability etc.

Equity release only allows a % value of the house to be liquidated. She might live in a tiny house in an area where property prices are low and any capital would make her ineligible for Pension Credit - for example.

The insecurities and very high rents of the private rental market are hardly a sensible move.

Single women pensioners are so often managing on much lower income than men, and being solely responsible for utilities and other overheads on a single pension income is very different to managing on two pensions.

But hey....wealthy boomers, eh?

Not saying it's the case for the woman you're talking about op...but I have known many elderly people who are absolutely convinced they are poor when they're not. My own mil would refuse to put the heating on and head out in the evening just to buy yellow stickered food....she owned a house outright and had hundreds of thousands in the bank. I blame the medias obsession with the poor pensioner narrative

It's her home and maybe all she's known for a long time. Why leave a secure home for the uncertainty of renting?
I get your point about releasing equity but for a lot of people their homes are emotional and they aren't seeing them as a financial asset that could be realised.
I've been trying to get my parents to downsize for years, but they are very attached to their home and just won't leave it no matter how much their lives could improve if they do so.

If she releases equity it will make her ineligible for a lot of means tested benefits and help. Basically this expectation punishes those who have saved and made provision for their old age over those who have lived beyond their means during their working lives. You could have two families on similar incomes throughout their working lives, one family spends on expensive holidays, cars, clothes, entertainment and perhaps has a non working spouse and / or someone who is self employed and haven’t made sufficient provision for their retirement. Why should those who have been sensible be penalised?

Equity release though if you are hungry and shivering makes sense.

If the family want the house why don’t they pay her gas/electric, you know look after mum whilst protecting their inheritance. A cold, unmaintained house is worth less after all and clearly there is no cash inheritance to help.

This, i have relatives that took awful advice with an "equity" company now they don't own their house the company does, i don't think older people should be renting either it would cost them a fortune.

Selling and renting would be insane. You have no security in renting so could end up having to move multiple times.

A lifetime mortgage is insanely expensive. If you decide to downsize or move somewhere more suitable as you get older, you will more than likely not have enough equity to do that.

Downsizing could be an option if the finances make sense but they don't always.

It’s not always easy to downsize. Many older people want a bungalow but they are quite scarce and can be expensive due to plot size. Or will need a large amount of work and updating.

Moving is stressful, especially if you are on your own

I have never heard good things about equity release so would never recommend that

So you mean they would have to pay for shit they need with their own money rather than government money.

Well cry me a river.

I never saw pensioners up in arms when child benefit became means tested

@Tabarnak
Boomers as a generation are wealthy - the wealthiest probably ever
The Government can’t make policies for individuals.

Winners and losers at every age.

An elderly lady wpuld want to rent?
Unstable and not so great maintenance let alone the rebt costs I am sure are as high in the Uk.
Get real.

There are a lot of other downsides to equity release and if you are elderly and unsure and you've heard all the downsides then you'd probably give it a swerve. I mean she could use food banks but she doesn't mention those either.

House equity release - from AI:

Releasing house equity in retirement provides tax-free cash to supplement income, fund home improvements, or clear debts without forcing you to move. However, the interest on lifetime mortgages compounds rapidly, significantly reducing the future value of your estate and potentially impacting your entitlement to means-tested state benefits.

And ultimately, it is recognised as being a bit of a con.

Renting - even with the recent changes that can be unstable. And you would likely struggle to put in home adjustments (like stair lifts, grab rails etc). Daft to go from owned to rented if can be avoided.

And buying a smaller property? Between stamp duty and all the other moving costs you may not be left with as much as you would like (depending on the difference between the sell and buy price).

Elderly should be able to eat and pay heating, water and rates using the pension.
They deserve to be able to keep their home. They saved for it and paid taxes.

A huge number of houses are not eligible for an ER loan, plus they have such bad press, most people are put off. She may also have passed the age where is feels feasible to move, it's a massive undertaking and hard once you are in your 70s+.

I don't disagree though that it's a bit off claiming poverty whilst living in a decent sized home.

I think the underlying issue here is insufficient supply of decent places for older people to move to. We would move / downsize if we could find the right place but what we are looking for barely exists, flats are shoebox sized with massive service charges and bungalows are priced higher than most houses so don't release much / any equity anyway.

Rent is expensive
here a 400k house sold you could rent back for 24k a year so 16years.
I guess you could invest for 16k a year.

I inherited a bungalow in a safe, vibrant area, it’s been a bit costly, but we have kept it (renting out long term to a lovely pensioner), for this exact reason. There is no way we are selling that property.

Yes we could get a huge lump sum now, but we are thinking ahead, not enough do (and I realise not everyone inherits a perfect retirement property) but we could be “living it up” but would rather the more boring, secure option.

Statistically yes - but that's on average.

Pensioners who really are struggling and NOT wealthy are hardly a tiny minority. There are loads of them.

And Gvt DOES make policy that includes indviduals with different circumstances - hence Pension Credit.

I am a younger Boomer - I benefitted a LOT (relatively) in not having a student loan, affordable house prices.

But I was always in a low paid charity sector, my employers never paid a penny into my pension until the last moment when workplace pensions were mandatory, and then at the lowest rate. I didn't get any free childcare hours etc - and for the majority of my working life it was expected that the State Pension would be paid earlier than it was, and at a rate which then seemed liveable on. I didn't have enough ££ for most of my working time to contribute to a pension. Never had tine off work except 2 4 month maternity leaves - couldn't afford more.

All fine - things change, I am not moaning and I do know how hard it is for younger families now.

But I am managing as a single woman on a tiny amount above state pension and am definitely NOT wealthy - whatever the stats say. And I am far from unusual amongst my friends.

Selling costs a lot.

i have a house which is too big for me and by the time I’ve paid stamp duty and moving costs you are looking at 30k.