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Original poster

No Family - Retirement and Equity Release

22 replies

Furries · 24/03/2023 21:22

Am single and that definitely won’t be changing! No kids and very small family, no nieces/nephews and this won’t change either.

Am just pondering really. If you were in this situation, and mortgage was cleared by retirement age, would you consider equity release/lifetime mortgage etc?

Will definitely be leaving something in my will for a friend’s children, plus a couple of charities. At retirement age, I’m probably going to be asset rich re house value, but cash poor re monthly pension. Am thinking equity release would definitely give me a much more comfortable retirement, but am wondering if it’s daft to even contemplate this.

I would, of course, seek IFA nearer the time, but any views would be appreciated.

Of course, by then I could have won the lottery!

OP posts:
Sunseed · 24/03/2023 21:28

Not daft to contemplate. With no-one financially dependent on you, you are well placed to consider this option. Risk of money running out too soon though so important not to do this too early or spend too much too soon.

FireBeachDancer · 25/03/2023 12:19

Why not downsize instead ?
Then you are in control of your money, not some equity release company

DeeHellem · 10/04/2023 20:35

Not daft at all.

Lifetime mortgages are designed for the scenario you've outlined.

Your need to take advice anyway, and you're keen solicitor is part of the process too. It can only be recommended once all other options have been considered and discounted.

Only deal with an Independent Financial Adviser and make sure they have the added qualifications needed to give that advice.

Stuffin · 11/04/2023 05:26

I am contemplating equity release and downsizing or both.

Although I don't expect to need the money to supplement the pensions it seems silly to die with a huge asset when I have no children to inherit so thinking of releasing it but still having the safety of being in my own home.

Tumbler2121 · 11/04/2023 05:42

I’ve been looking into this also, and may well do it at some point. Downsizing is all very well but you could end up not much better off by the time you’ve had the upheaval of moving and all the expense involved.

MrsTerryPratchett · 11/04/2023 05:59

It sounds good. But I'd hate to give the companies who do these schemes my home. I know it's illogical but there we are.

I think I'd rather downsize or have a larger or student or something.

MrsTerryPratchett · 11/04/2023 05:59

Lodger!

DeeHellem · 11/04/2023 07:08

MrsTerryPratchett · 11/04/2023 05:59

It sounds good. But I'd hate to give the companies who do these schemes my home. I know it's illogical but there we are.

I think I'd rather downsize or have a larger or student or something.

The most common type of ER is a lifetime mortgage. That's a debt secured against a property you continue to own.

The lender doesn't get your house.

When you no longer need the house then the debt falls due to be repaid. If there are no other assets to settle the debt then usually the house is sold, by you or your representatives.

The lender gets what you owe them and the rest is yours, or for your executors to distribute if you're no longer here.

But you're not giving the lender your home.

Original poster
Furries · 11/04/2023 12:51

Thanks all, at least I now feel like I’m not completely bonkers!

OP posts:
Original poster
Furries · 11/04/2023 12:54

MrsTerryPratchett · 11/04/2023 05:59

It sounds good. But I'd hate to give the companies who do these schemes my home. I know it's illogical but there we are.

I think I'd rather downsize or have a larger or student or something.

I get your thinking, I’ve felt like that as well in some ways.

But I like my own space too much. I couldn’t take in a lodger (or a larger!). They’d probably end up under the patio 🤣

And I don’t really want to move. It’s expensive, it’s stressful and, mostly, I love my home and really don’t want to leave it.

Although maybe I could sell it and move to The Whitsundays 🤣

OP posts:
Whatdayisitalexa · 11/04/2023 12:56

Same, it's like a reverse mortgage as far as I can see

DeeHellem · 11/04/2023 13:03

Whatdayisitalexa · 11/04/2023 12:56

Same, it's like a reverse mortgage as far as I can see

A reverse mortgage is a variation on the theme, and is sold in the US mostly.

It's not the same as a lifetime mortgage.

LauraNicolaides · 11/04/2023 13:17

I think they got a bad press a while ago because they are a fairly expensive way to realise the funds. But that cost is effectively borne by your estate after you're gone, and it only matters to you if you are worried how much you're leaving - mainly only if you have kids.

Call me selfish, but I'd much rather have £100k to enjoy now while I'm alive than to be able to leave £400k to nice enough people that I'm not particularly responsible for. If the finance house makes a killing then good luck to them, I'm grateful that they made it possible!

Original poster
Furries · 11/04/2023 13:19

@LauraNicolaides - that kind of sums it up for me!

OP posts:
DeeHellem · 11/04/2023 13:26

LauraNicolaides · 11/04/2023 13:17

I think they got a bad press a while ago because they are a fairly expensive way to realise the funds. But that cost is effectively borne by your estate after you're gone, and it only matters to you if you are worried how much you're leaving - mainly only if you have kids.

Call me selfish, but I'd much rather have £100k to enjoy now while I'm alive than to be able to leave £400k to nice enough people that I'm not particularly responsible for. If the finance house makes a killing then good luck to them, I'm grateful that they made it possible!

Not wholly accurate. A trigger for repayment is a permanent move into care, so in that scenario you're still here.

They don't really make a killing either. It just looks that way because of the effect of compounding interest, but they've paid to borrow that cash and typically wait 15 years to get a penny of it back.

MrsTerryPratchett · 11/04/2023 14:39

Although maybe I could sell it and move to The Whitsundays 🤣

Good plan. See you there (with everyone else!).

We should have the French system of viager, which is when a private buyer pays you while you're still alive and gets your place when you die. Very strange system!

HelpsHeal · 11/04/2023 15:16

I agree with PP, downsizing is always suggested as a way to release cash for retirement, but unless you live in an unusually valuable house, I'm not sure what you'd get after costs, especially if you're looking to move from a house to a bungalow.

Round here the only way to move from my 4 bed detached house would be to buy a small terrace on a not so nice estate ( which would release some cash) or a small detached bungalow will cost the same, possibly more than my house. Down sizing a little bit to say a 3 bed semi wouldn't make much difference in terms of cash to live on.

Equity release makes sense to me if you need the cash. Even where you do have someone to leave it to, in most cases I'd say enjoy it rather than worrying about what you'll leave behind.

TheIsleOfTheLost · 11/04/2023 17:25

Is this house suitable to house you until you die, assuming your needs don't make you go into a care home? Think do you have a downstairs loo, ability to put in a stair lift, have one or two steps between rooms that could be dangerous if you were unsteady? Equity release is probably a bad idea if your house isn't suitable, as if you wanted to sell to downsize, or be more supported in a suitable property, you would have less money to buy somewhere else.

Chewbecca · 11/04/2023 18:45

I’m not a fan I general of the product but in your circumstances, yes, it isn’t daft.

It’s a regulated product so you do have to but via advisors with specific qualifications.

Be aware that most are fixed rate for the lifetime of the product so pick your timing carefully, ideally when rates are lowest! You don’t need to draw all the cash down at once either, many allow you to do gradual drawdowns so you are not borrowing money you don’t actually need.

Familyhistory · 11/04/2023 21:27

following!

Whatdayisitalexa · 11/04/2023 21:34

TheIsleOfTheLost · 11/04/2023 17:25

Is this house suitable to house you until you die, assuming your needs don't make you go into a care home? Think do you have a downstairs loo, ability to put in a stair lift, have one or two steps between rooms that could be dangerous if you were unsteady? Equity release is probably a bad idea if your house isn't suitable, as if you wanted to sell to downsize, or be more supported in a suitable property, you would have less money to buy somewhere else.

There is no perfect property, a stair lift is always an option. Access to a reliable bus route is more important, for shopping and staying sociable rather than planting you out in the suburbs. A bungalow would quite likely have a bigger garden than a 2 up 2 down, and be less manageable for a person less mobile

Otins · 19/03/2024 16:35

Familyhistory · 11/04/2023 21:27

following!

An old thread, but I'm following too.

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