Equity release

[KimberleyClark]

Please note this thread is on the MNers without children board.

Been thinking about this. If you have no children and are not invested in leaving your home to anyone else, it could make sense? Release some funds for care and having fun while you still can. Interested in hearing views.

It's a very expensive way of achieving it. It's ok if you go in with eyes wide open, or if it's your only option. But otherwise, it's better to downsize if you can.

You can normally only release about 25% of the value of your property and the interest rates are very high.

where we are, downsizing from our three bed semi to a two bed flat in an equally nice area would release very little capital. I’m just idly wondering about it.

In your situation I’d do it in a heartbeat!
Its irrelevant how expensive it is, it won’t cost you anything!

Theoretically it sounds like a good option for you.
However (always a but!), it would be wise to see an IFA as they can see a better overall view of you finances and potential future finances and will be available to advise accordingly. Also they will know of financial products random internet people may not be aware of!

Yes I would do it if it made my life more comfortable. What’s the point of leaving lots of equity in your home if you need the money. Might as well spend it!

My Great Uncle did it, he was a widower with no children. He did talk it through with relatives first and they were fine. He was in his late 70’s and wanted to visit family in Australia and New Zealand. He had a small house and went into a care home which had to be paid for by the state as there wasn’t enough to pay this long term from his house sale. But he had a fantastic year travelling and as this was the only way he could have done this, my parents didn’t have any issues with him doing it.

It makes lots of sense.

Many people have been ripped off by equity release, but they’ve been forced to become less rapacious in the last decade or so.

It is still expensive, but if the equation is some money for you now vs more money for a donkey sanctuary when you’re dead, it can be wise.

I have a one bed in London and with the market as it is at the moment I'd be in the same situation. I'm keeping equity release as an option as I don't really have anyone to leave the money to, so I've been wondering what, after various bequests, my options might be. Effect on care home fees if I need that is my main concern.

He did not need anyone’s approval! Why should your parents even think they should have an issue with it? And even if they did, it’s none of their business what he does!!!

@Mindymomo It's a bit weird that your parents seemed to think they had a veto power over it. I can't imagine my siblings thinking they have the right to dictate where my money goes, in case I'm not giving enough to their offspring.

Effect on care home fees if I need that is my main concern.

It can make things tricky if you later need to sell the house to pay for care. Especially if there are early repayment penalties involved - you might have £X left in equity that you could get back if you sell in 5 years, but early repayment fees mean you'd get nothing if you sell now. And you can't just delay moving to the sheltered housing/care home until you're out of the pension although period.

Doesn't mean it should be completely discounted as an option, but you need to model multiple scenarios.

I have considered this for the future because the bank can just have my home back when I pop my clogs, is that correct? I’m thinking to live in a retirement block though so I bet banks don’t do equity release on those!

My parents have done it and they are released from penalties if they both die or go into care homes, or one dies and the other goes into a care home.

The repayments are based on either when you die or when you have to go into long term care. Not stepfather is in a home, were selling his house to pay off the ER, and I have been notified that no early repayment fee will be paid.

i’m in my 40s, single and childfree, and I’ve had a sibling make noises about me starting to give their young adult children some of my money now ‘when they’re starting out’. Ultimate CFery and very likely to backfire on them, tbh

@sammylady37 That's awful. Someone dad considered a family friend approached him for money. Dad found it quite upsetting, understandably. The guy pulled out the whole "your daughters are fine for money and don't have children".

The guy also manipulated his parents, one with dementia, into the cheapest care possible, saying he would do lots of it, but didn't. He just wants the biggest possible inheritance.

He and his family have designer everything...they just want more, more, more.

I’m also pondering the same. No one to leave my house to but already have some provision for care home fees if needed.

Have seen someone locally here in the same situation who has actually done it, they seem like a different person now to me tbh, happier, definite spring in their step, complete change in demeanour, enjoying their life, has given them funds to make their existing home fully modernised with the proceeds and a joy to truly enjoy living in it.

@EmmaEmerald thats awful. Some people really have no shame and no scruples.

They do - or did - but they really shouldn't. I work in probate and we've had to hand at least three of these back to the lenders because retirement flats are a bloody nightmare to sell at the best of times and beneficiaries have been left with nothing.

Having said that, DH and I are considering it for our house.