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

It's an interesting question.

Many people do not understand lifetime mortgages or equity release as can be seen from the answers above.

I think there are several answers :

i) People want to leave a higher value as inheritance, which would be reduced by lifetime mortgage or equity release.

ii) People see their house as a red line - and once they start using it to fund day to day living there they are entering a new stage of financial desparation.

iii) People don't understand products like equity release and lifetime mortgages which often have a bad reputation. Many people will call them bad without understanding what the product is or why.

iv) Some people have a completely irrational attachment to their properties and the slightest hint that they might be losing control of it sends them into complete breakdown.

Personally I don't have an issue with people wanting to hang onto the house and not liquidate it and live in poverty. It's their choice.

What I do have a problem with is those same people claiming they are poor and deserving of state benefits and the government giving them support. You shouldn't be more eligible for support just because you've decided to pile all your money in one particular asset.

I agree with you. I know lots of older people who live in $1M+ houses yet are always moaning about not having enough money for essentials. Well just bloody move then! I have no sympathy for these people.

I know an elderly couple who have sold a large bungalow released half a million and are now renting rooms in an assisted living place. They have freedom but support if one of them falls.

Maybe renting isn't great but they certainly feel calmer and less stressed about money.

There are many working in low paid jobs now who will never own and have rent to pay out of just a state pension in future generations

You are “wealthy” in terms of your working life/salary and what you have at the end of it.

For many in that generation and some generations that came after, housing security is everything.

Health is wealth and so is certainty of the roof over your head. Not all wealth is measured financially.

This ☝🏼

This makes a lot of sense, but there's also the issue of everything costing vastly more than it once did and some elderly simply not getting "used to it"

In addition there's always been a thing of savings being strictly "for a rainy day" and if you add hopes of leaving something for the kids it can be easy for this kind of mindset to develop

They are loan sharks. I’d rather eat one meal a day then give a lifetime investment to a loan shark company with extortionate interest rates.
She should rent out a room or move to a smaller home.

But how quickly do you recover that £30k with lower council tax, energy bills and maintenance costs?

Plus you might have cash in the bank even after the £30k.

Also even if you don’t, so what? If you move to a property that is more pleasant to live in what’s the problem with spending a bit to achieve that?

Some equity release can be sensible but there are so many scams around it, it's hard for people to understand.

I'm unmarred, no kids, so part of my later life funding plan would be c33% equity release of my home if I needed it. Would leave enough to cover costs etc when I die and probably some inheritance for family (if I need care however, obviously the house would be sold to fund that).

I have no one to leave my house to (no kids and nephews and nieces don't need the money), so I'm planning on selling up when I'm about 70 and either renting or buying a small flat and living off the equity. It will be much easier for whoever is dealing with probate to just have to sort out cash in the bank rather than have to dispose of a house that isn't in the UK.

The only issue with being a renter is it can be insecure, you don’t want a keep moving on, I’d downsize definitely, hire some help but never choose to rent. It’s a nightmare in today’s market.

Aren’t about 1 in 5 boomers living in poverty, and I’m sure not all the rest are sitting on millions.

We don’t know how big this woman’s house is and where she lives. Could be a small 2 bed terrace in a cheap area. What can she do to release funds in that example. A person renting with similar income and sized property could probably get benefits if they don’t have other assets.

Because when you are short of money or are on a fixed income, knowing that the roof over your head is paid for is a massive thing. She may be hungry, get cold etc, but she won't be living on the streets. As soon as you sign over your home to someone else, you lose that security.

There’s plenty of people have got real housing problems that cannot be resolved but this woman, no, she’s making a choice. She is choosing to keep her house over having a better quality of life.

I lack empathy for this sort of person. It’s an active choice.

How do you know that? Did it say in the article she lived in a big house?

No logic to that.

Person a) saves all their working life and amasses 400K in the bank.

Person b) spends all their life and ends up with a 200K house and zero money in the bank after squandering 200K on holidays, cars and kitchens.

Person a) is eligible for zero help as the cash counts against them.

Person b) gets help because the house isn't counted.

Now claim that that is "fair".

@Powerbungalow do you have a link to this womans story I did a quick search and can't find anything recently.

They can. State pension is £1k pm. If they don't get this, they'll likely be entitled to pension credit. This more than covers the basics unless you're in a larger than average property and in that case, equity release or a lifetime mortgage is a no brainer. It's not necessarily expensive or 'a con' either.

And it's not a given that they saved for it or paid huge taxes. This is the generation many of whom bought a family sized property on a single low salary and many of them have seen lottery winning sized increases in equity. They often have choices that will never be available to younger people.

My parents are in this situation. They tried to seek their house but had very little interest. The house that would suit them rarely comes on the market. I expect they won’t ever move now.

I have heard some horror stories about equity release.

It would make nonsense for her kids to help out if they are going to inherit. But then that is not guaranteed if she ends up in a care home etc.

I don’t know any. I’m sure there are some but I have never met one. I live in a high cost area with lots of 1m homes. This isn’t the case for most of the country where 1m homes are few are far between. Pensioners in these areas won’t have 1m homes or large pensions because they will probably have been on low wages when they worked.

I meant more sense not nonsense!

Renting would be insane - expensive, and the stress of having to move if circumstances change. Moving is one of the most stressful things you can do, so older people avoid it which is understandable. In North American and Europe the state pension is liveable, here its £12k per year which is about half the minimum wage.

yes downsizing is an option