Equity release?

[Sometimesitsmyownfault]

Or a lifetime mortgage, or similar?

I'm thinking of doing it and can't seem to find a downside apart from the early redemption fee.

Has anyone been disadvantaged by taking some of their equity. I have no kids or dependents so no worries about leaving an inheritance. I'm mid-fifties and want to have fun while I'm young.

£1.4m

The mainstream ER lenders won't allow renting (some will offer ER on a BTL property but not on your main residence). The advice you will get from a qualified ER adviser will be to downsize, speak to one.

I've spoken to one and some do allow AST on primary residence.
Your last statement was quite definite. Are you an IFA and if so, why do you say that?

The thing is sometimes, without ALL the ins and outs of your finances now, your future finances (pension plans and investment options, housing for the future, redevelopment possibilities of your current residence etc.) no one can give you anything other than the general position which is that ER in your 50s is vastly unlikely to be a good idea.

I am helping some friends (in their late 70s) sort out a 'lifetime loan' against their home at the moment.

Although you are young (I'm older!!!) I totally get the wanting to enjoy your assets while you're fit, healthy and able to do so. And likewise, enjoy your lovely home until it becomes too much.

The big thing to me is that you are not wishing to leave any of your assets to DC/family - if that was the case, I think you would look at it differently.

So long as you're financially astute, you know what the risks are (ridiculous interest rates/not being able to sell when you plan), only you can decide if it's appropriate for you.

One other quick thing - I'm late 50's - DH and I always spoke about down-sizing around this time (although our home isn't our pension plan), but now I'm at 'that' age, I don't feel ready to move on. Infact I feel no different to 10 years ago, and have actually had dreams about moving where I've been really unhappy.

So allow for the fact that in 5 years time you may want to continue enjoying your home, and not selling for another 5 years (or more)!

Not an adviser, I work in this market and have know the terms and conditions of the major lenders as I have to verify the advice given by our advisers.
ER is often not the right solution, given the limited amount of information you have provided, downsizing seems more appropriate but you should have a full advice meeting.
I'd have a look for an adviser here.

www.equityreleasecouncil.com/home/

Downsizing is a possibility - House has been measured & photographed etc for possible marketing early September.

However, my house was always bought as an investment, I didn't actually love it but all my guests think it is fantastic.

So, say I buy a property for £400,000 - that's what a cheap bungalow costs here, spend £100,000 on kitchen, bathroom, garden etc £15k selling fees & solicitors £12k Stamp Duty £2k solicitors, £5 moving..... there is an extra £35k cost to downsize.....

Then I will have to manage actively the remaining sum, take off the £300k (no, not going to really spend all that, but that is what I 'could ' have taken ) = £835k leaves me with £565k pension pot.

Or equity release fees + interest for 5 years = £100k (massive worst case scenario allows for keeping house an extra year) + £300k to pay back. = £400 k leaves £1million for house + pension at today's rates..... assuming no growth at all in house prices on South Coast...

But you'll still have to spend the £35K on moving in 5 years' time? And so will still end up with spending £500K on a new house and £500K 'pension pot' to live on after that. So the disadvantage you calculate is what, £65K over 5 years? £13K per year that you think you will 'gain' by equity release, plus the advantage of spending £300K?

It sounds simplistically like it should work. But I just think it introduces a massive element of extra risk to manage into your financial affairs and that there is a simpler way of going about it. Horses for courses, perhaps.

Separately from the financials, I would never do equity release myself due to the principles...

1. The company will undervalue your home. They come at it from the perspective of “we’re helping you”, not “I’m a buyer in a potentially competitive market”. They appoint their own valuers to decide this - maybe those valuers are “independent”, but guess who is keeping them in business...

1. In most policies the equity release company then OWN the home/have some ownership rights over it - you just live in it until you die or become incapacitated. You do not own the home outright and may not be able to pass any part of it on to relatives as the equity release co will want a quick sale of the property when you die.

1. The policy is sold to you by an independent financial advisor. They will have you sign a form saying you understand all of this. This means the IFA takes no responsibility for the policy. So if you are not happy with the policy... you have no one to turn to. Not the IFA, not the equity release company.

1. If you want to repair your home, check whether the equity release company has to give their consent to changes to the home (and therefore the value of it) - worse, people often use equity release money to “do up” their home, which only benefits the equity release company, as they own the home.

1. The equity release company can take a medical practitioner’s view as to when you become incapacitated. Ie they can chuck you out of the home when you’re an old lady.

1. The FSA has no grounds to assist you in case of a dispute. Effectively there is no ombudsman to help you as a consumer - see 3 above.

Tbh and this is not a professional opinion - maybe others have more rounded opinions on this - equity release is a scam. You’d be better in nearly all cases just selling and downsizing, or re-mortgaging to get cash.

Worse is how people endorse these financial products.. it looks like The Telegraph or similar is doing so using their own financial company, but the way they present it is as if their own financial experts are scrutinising and approving this. Companies want your money they do not care about you or your sentimental view of your house, IFA’s make money recommending the product to you... basically you’re giving your house away.

Especially bad are the famous faces that endorse these products. Plus the slant the companies use of “we’re helping you” when they’re robbing you. Plus how lighthearted and smart the adverts make this decision seem when it’s over the most valuable asset you likely have and will ever have.

The only risk the equity release company takes in all of this is that the property could go down in value, which is a very limited risk.

TBF equity release has changed hugely. Drawdown seems to be the way forward now - no-one owns your home, although they would have a charge over it, as would any lender.

Notmy real with respect most of your post is rubbish.

1. The valuation is carried out independently - you can also appeal the valuation

2.with a home reversion plan, the company will own part of the property but these are the least common form of equity release. With a lifetime mortgage you retain complete ownership. 3.The adviser has to hold a specific qualification in equity release, you will also have independent legal advice, that solicitor will sign a certificate to say that they have explained the transaction. Both of these individuals are regulated by the FCA and the SRA respectively and just because you have signed a piece of paper does not mean that they are absolved from the quality of advice they give you. 4.see point 2, you own your home, yes a lot of people do take ER to improve their properties, usually because they want to replace outdated fittings or make the property more suitable for old age - these types of improvement would not be a problem.

1. No they can't.

6.The FCA regulate both the advisory firms and the lenders so you would have recourse to the Financial Ombudsman Service. For the solicitor they have their own regulator and you can make a complaint to them. www.equityreleasecouncil.com/home/ This website tells you more.

With regard to your second post notmyreal, in my experience the vast majority of advisers do act in the best interests of their customers. A high percentage are recommended not to take ER and do something else, if you want decent financial advice on a transaction as important as this it's not going to be free.
Yes the advertising is quite light hearted but in a lot of cases the customer is using the money to enjoy life, in some cases though it makes a difference between eating and paying the heating bills or going hungry and being cold. It's not right for everyone though and should be very carefully thought through.