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

There was a lady on the news yesterday who said she was widowed after caring for her husband and left in a tight financial position in their rural home that she can’t heat. She can’t afford to turn on the oven, used an air fryer once every few weeks etc. She then went on to say she spends £50 a week on fuel to drive her friends into the local town as they don’t drive but she can’t afford to treat herself so she sits outside the shops.
She spends over £2.5K a year in fuel plus the running and maintenance costs of her car and racks up some serious mileage but doesn’t do anything when there - this is madness.
Her friends are local, they could meet for company and a cup of tea in each others homes and gardens, she could reduce her trips up town to once a week or fortnight if essential for shopping or have it delivered.

https://www.bbc.co.uk/news/articles/cglj9685nj0o?app-referrer=deep-link

This was the one I read.

Exactly this.
If you are starving and cold then either

• sell up and downsize
• equity release and family kiss goodbye to their inheritance but surely they won't mind if it means you are comfortable
• family help you out now in the hope of preserving their inheritance

I am a homeowner but so many younger adults I know are renting with huge student loan debt and I fail to see why their taxes should bail out elderly people who just want to cling on to capital wealth

Tell me you don't understand compound interest without telling me you don't understand compound interest.

Thank you

It’s a regular thread on here about people not wanting to move.
Im 50, I’ve had the conversation with DH already, once DD has finally gone we are moving to a bungalow whilst we are young enough to do it/enjoy it.

My poor neighbour has just been returned from a care home as she was unhappy. She can’t however, get in and out of the front door because of the massive step. She’s living downstairs. She’s actually lived alone in there for a long time (we’ve been here nearly 30 years and her husband had died sometime before that and her children moved out).
we live somewhere where she could easily afford a bungalow. There was a scheme to build some one bedroom bungalows which would have released equity to.
MIL could have sold her incredibly unsuitable flat for something more appropriate, easier to keep and released a huge amount of money. Wild horses wouldn’t have gotten her to move though.

Do you say the same to young people saying that they can't afford a deposit for a house or flat in the South East/ tourist hotspots when housing stock elsewhere is generally more affordable?

I did an equity release and it was brilliant for me. When I sold the house, I did have to pay a penalty, but if I had waited a couple more years it would have been penalty free.
My mother did the same many, many years ago. After she died about 20 years later, the money was paid back and there was still a decent inheritance for 5 children. It enabled her to have a new car, repair her house and have little luxuries whenever she wanted. Equity release is not awful, it’s a means to an end.

I’m an older boomer. 80. DH and I manage OK in our house and we’re ok financially as a couple. But, age and infirmity are creeping and a flat in a custom block with support would be ideal in the future. However, our house wouldn’t raise enough to buy private retirement housing, even if it did, our individual incomes would not be enough to support the ongoing service charges, once one of us dies. Then there is the issue of our DC trying to resell a retirement flat, some horror stories on here about those problems.

Our ideal solution would be social housing, ie a housing association, but most of those where we live let their properties through the local council, who have removed all homeowners from their housing register.

What a shame we scrimped for a very modest home, where we are now stuck. Wouldn’t touch equity release with a bargepole!

I agres with you about the equity release in a way, OP. My PIL have a 4 bedroom detached house in Herts worth £900k, and my DM is always saying to me that they should sell it and downsize to bd nearer to us (Norwich), with a lot more money. Given they don't have huge pensions, I can see the logic.

Big change to make though in your 80s though, after living in the house for 40 plus years. I can see why they wouldn't do it. It's swings and roundabouts, I suppose. Perhaps they would rather be worse off but in a bigger home. 🤔

I think it's a real shame that this isn't an option for more elderly people. It would be great if there was some sort of not for profit organisation that could offer the McCarthy & Stone type properties on a rental basis.

Oh look another boomer bashing thread. Must hard with your free government funded child care, UC credits, maternity/paternity leave rights.
Why not pay for your own shit you need rather than government money

Cry me a river

For me - its the balance between warmth and food and i) People want to leave a higher value as inheritance, which would be reduced by lifetime mortgage or equity release.

I would definitely use an ER if it was available instead of being miserable - inheritance is a gift, not an expectation - and what do you think people spend it on? We have an inheritance from my lovely in-laws, and we are using it for a new car (which was needed, and i dont mean a brand new expensive one) and upgrades to our house, but if they had not been able to live in their retirement, I would much rather they had a good life than leave us money

I get the not wanting to move, but again, dont whinge that you have a huge asset and you're living on sandwiches in the cold

Oh no they couldn't possibly move their "familes" and jobs are there, if only these old folk would just give them their houses or die. Either or !

Would you have enough to buy a smaller house?

Getting equity release is a really bad idea, everyone, and I mean everyone, knows this, apart from enough desperate and financially ignorant people to keep the con going.

My council tax would be about 200 a year less

i’m in a modern new build - energy costs and maintenance costs are low.

paying money out of savings to move somewhere smaller that’ll only save me 1k or so a year isn’t a financially realistic proposition.

i’m on pension now and don’t have those savings any way.

My in laws did ER when my fil had got into a lot of debt.
He was really struggling with it mentally and carried the burden by himself.
My mil’s attitude towards money is like a child.
She just spends and spends in Waitrose, rather than the more sensible Aldi/Lidl.

whispers She wouldn’t want her neighbours to think she shops there!

So, my fil did ER and it’s not great, in the long run. When she dies, her bungalow is owned entirely by the bank.

Not really.

i live in a very cheap area. My house has 5 bedrooms. If I downsized to a 1 bed flat I could net 50k maybe after 30k costs.

it’s not really worth it.

when my youngest moves out I’ll probably rent out rooms.

Is it squandering though, or is it just living your life when you have the health and means to do so? I do save for my pension but savings are definitely balanced by enjoying life in the here and now, doing things with the kids and having some lifestyle benefit that comes with a very hard won career. Otherwise what’s the point?

You don’t know what’s ahead of you, for every person I know living well into retirement, there’s another who didn’t live long enough to see their pension - and in some cases lived a very frugal lifestyle to ensure they could have a more comfortable retirement that they didn’t see.

My parents won't consider downsizing because 'we want to leave it for you and your sister'.
Despite us both telling them that we aren't waiting for them to die, they won't have it..
Their property, their choice

Many pensioners grew up knowing they were one step away from the workhouse, (abolished in 1930) in their mind owning a home is their only protection against destitution. Those i knew worked harder, longer and for less money that most of us could imagine. Even in the 1960's benefits meant having a visit from an official to look at what was in your home, people were expected to sell furnishing and personal possessions pay for food, before being granted assistance. The People of the Abyss is a good read to help understand the mindset of those who influenced the older pensioners of today. Are we really going to go back to believing poverty is a moral failing?

Equity release is bonkers because you could outlive the income and be evicted.
However, I agree she should look to downsize within her local community.

Downsizing could be sensible if you needed more funds but equity release has a bad reputation.

But she won’t need her bungalow when she dies, they’ve spent their money having the retirement they wanted. Equity release may not be the most prudent financial arrangement but they have no obligation to leave their home as an inheritance if they need/want to spend the money while they’re alive.