Wnat to give dc - young adults a house deposit. Is equity realease always a bad thing? And if not , who with / how ?

[Velveteenrabbitt]

Have made many financial mistakes in the past for many reasons I do not want to go into .
So - current situation-in 60s - both Dh and I .
We have very limited savings (to many), but own our own house.
Both dc are mid to late 20s and the deposit for a home is a real challenge. ( the purchase costs and the deposit) .

The only asset we have is our home. Feel like am sitting on a pile of money that we cannot use .
We are aware that dh brother has sold his house , gone into rented , and has been able to
help his dc and has money available to him now.
Another family that I
know has done the same .
For us , we would be worried about the vulnerability of renting in our older age and would but unlikely to be offered a housing association type
Does anyone know if equity release if ever a good option please? And if not, is there any way at all to
release some money to
assist the young folk ?

Df was well off- he left all of his estate to step dm - she is now spending it on very very lavish living - never helps dc out . Her dm lived till 100 - she is very likely in her late 70s now to outlive me ( 61) so inheritance for us and possibly dc is out of the question.

Don’t go into rented. Very insecure.

consider downsizing but be aware you’ll probably need to move area to free up a significant sum.

Do not do this. My PIL did this. Got a fraction of what the house was worth and due to interest the bank will own everything when MIL passes away.

They refused to sell up and move when they could. As a result FIL had to go into a home as he could no longer manage steps etc due to dementia. MIL is crippled with arthritis and confined to the house and one room. The house is now falling apart - literally. It is damp, cold and dangerous but she has no money to move.

Either sell and downsize or do nothing and your kids can wait for an inheritance (if any).

You might be surprised about housing association property. Over 55s accommodation is one of the few things constantly available in my area and the rents are cheap £60 a week!

I think equity release is a tricky one as for a relatively small loan you can find yourself in a lot of debt in 20 years swallowing up entire equity of the home. So I would say if you are going to do it take as much out as possible and accept your home no longer has a value. I’d probably sell though if I could get a secure rental. Give some to the kids and invest the rest. If you had an inexpensive rental and £100k you could probably make enough to cover rent/ bills. Then it’d be there for care costs if you need it.

I knew someone this happened to, she was really confined to one room with commode, bed and chair. House just crumbling and no money to maintain. Such a shame as would have really benefited from a cheerful care home where there is chat and lots of cups of tea instead she was very lonely.

Equity release is a terrible idea.

You can't give what you don't have.
If you can't give cash to your DC but really want to help them, can you give your time and experience to save them money so they can save for their house deposits faster?

Can you help them budget, learn how to invest /save?
Can you shop around on their behalf for better deals on their bills? Better rates on their savings?
Can you do their DIY / fix things that break instead of them buying new
Can you batch cook a few meals for their freezer so they spend less on food shopping/lunches out/takeaway
Can they move in with you and live rent free for a year?
Would you take in a lodger / rent out your garage /drive and give them the additional income?

Equity release is the most expensive way to borrow. If you want to give them cash you’ll need to downsize or ket them live with you rent free.

You sound lovely, and it’s very admirable to want to help your DC like this, but I would also advise not doing equity release. My gran did it and died penniless despite owning her own home for about 50 years.

If I were your DC I’d be mortified at the thought of you doing that to give me help with a deposit. It really isn’t your responsibility to give them a big lump of cash to get on the housing ladder. The only person I am aware of in my circle who got such help, her parents were very wealthy, old money types. So lovely if you can, but very few people can, and it shouldn’t be an expectation.

I have worked in the property market
I am amazed that equity release is legal for anyone under 80 years of age
you are 60 odd
If you give 200k in ten years that will be 400k
You will end ip with nothing to leave your family when you pass
If one of you becomes ill and needs to move to a smaller house/bungalow/apartment the penalty charges to get out of it before death are astronomical
Do not rent - how on earth are you going to be able to pay rent when you are not working and living off a pension

What are your children doing to save for a property ?

Do they have a LISA ?

Do they work a second job ?

Do they live at home to save money ?

Do they want to travel & see the world instead ?

Need more info

You can sell & move somewhere cheaper & smaller

Don’t do it.

Equity release is apparently not as bad as it used to be as there are some increased legal protections, but it used to be terrible so that’s not saying much. Your security and choices in old age are also important to all of you.

You need to refigure your thinking. You are not sitting on a pile of cash, you are living in your home. Tbh the market as it is means it’s not even that easy to sell right now. Conversely, the ‘property ladder’ as such doesn’t really exist any more at the moment - I think it’s still a great idea to buy a house, but the days of cheap borrowing to get a minuscule place which you then leverage to buy somewhere bigger isn’t working. Stop worrying so much. Your children will probably do better to continue to save (obviously I hope they have LISAs) and perhaps buy later in life with partners who also have saved.

If your kids want to live at home for a bit to boost their savings, could they do that?

Equity release can have its uses BUT you are far too young. Basically you take out a mortgage and every single monthly payment you don't make is added to the debt so of course in 20 or so years it will be several times the amount you borrow.

It also prevents you downsizing in the future as you effectively don't own the house any more.

Moving into rented is an option but you really are giving up security in your older age which is arguably when it's most important.

Can you downsize now to realise some cash? If not can you afford some monthly payments? Could you get a small mortgage now and just repay it monthly?

Could you downsize and give them enough for a deposit?

Do not sell and move into rented!

Shelteted/over 55’s housing can be much cheaper to buy compared to other properties. However there are monthly service charges and these properties can be difficult to sell later down the line. You’re unlikely to qualify for social housing as you’re home owners.
I definitely wouldn’t do equity release for all the reasons above. Better to move to a cheaper area and free up money that way.
Will you get a pension lump sum when you take your pensions as that might be another source of help.

Also wanted to say the fact you own your own home is brilliant. So despite you saying you’ve made mistakes in the past you should be proud you’ve managed to have a home with no mortgage debt.

Don't do equity release. The only people who really benefit from doing that are people with no DC or relatives who can inherit from them so in those cases they might as well release the equity and have a fun time in retirement. There are people like this with literally no one they can leave their property to. Equity release is good for them. What you can do is just try to save a bit of money each month to give to your DC to put into a LISA. Make sure they open one before budget because RR could close them down. Can your DC live at home rent free and save a big chunk of money every month? That would be giving g them a hand up without jeopardizing your own retirement.

I would downsize to release the money, I appreciate you’ll have moving costs and stamp duty though. DP and I will be doing this, our house is much too big for us and costs ££££ to run. I would rather start giving the money to DC so that I don’t have much left than to the gov in IHT. I also think if you plan carefully you can buy a home that will suit more in old age.

GatherlyGal
do you mean sell up .. then buy another house , give some money away , and then get a small mortgage on the new property.
?

We live in amazing village - prices are very high for the area as its an area of a national park and visitors come - many people have holiday homes or cottages to let at about 1k a week so this pushes house prices up for locals - in fact many locals cant afford to live her and travel in to work .
The nearby town is the same .
The next nearest town is a run down seaside town with poverty, immigration issues, people placed from prison and drug use - but also has amazing areas and beautiful architecture. We could get a brilliant house there , but the centre is depressing really , but could be avoided .
We have a lovely community here and would like to stay - there is no were here to down size to as there was only 2 houses in the village we could actually afford.

Re post uni - both have challenging jobs - ds no way could he work extra hours as he has to do planning etc and mostly works 13 hr days, batch-cooks as no time in week .
dd less challenging but travels 50mins a day each way as cant afford to live in the area she works .

But fab idea to assist them in other ways a suggested above.

Terrible idea.

Your DC will (hopefully) inherit your property when you pass away, there will be much more value then if you DON'T ER now - that would fairly likely mean all the remaining value had been eroded and they will inherit nothing.

Use whatever you have to fund your retirement, leave your DC to manage their lives for now.

" do you mean sell up .. then buy another house , give some money away , and then get a small mortgage on the new property."

Sorry @Velveteenrabbitt that wasn't clear those were 2 alternative options!

Downsize to release cash OR stay and get a mortgage.

They can live with you and save and you can save a bit for them as well. If they have decent jobs and are sensible then can save a lot in a year.

how much do they earn and are they in relationships? Two average incomes at 2.5k each per month can save 36k per year if they stick to spending £750 each per month whilst living with you and you can add £100 per month to that.

Do not do equity release!
Do not go into rented accommodation.
If your dc are going to move out, then downsize?
Divide the equity released from.the sale between your dc.

Since you live in a tourist area, you could certainly look into using your house/land/outbuildings to generate extra income you could then invest that income for your DC house deposits

Eg set up as a B&B in the summer/ adverting as a holiday let when you're away from your home / charge for off-street parking etc

Honestly this is such a bad idea, renting in retirement is terrifying and your DC could end up needing to help you out. Maybe if you’re in a touristy area air bnb a spare room at weekends and save up the proceeds?

Best way to free up cash from your house is to sell it and buy something cheaper.

For us , we would be worried about the vulnerability of renting in our older age and would but unlikely to be offered a housing association type

why do you think you'd not qualify for housing association?

You could buy a retirement flat for over 60s which are much cheaper due to the limited purchase market - but they themselves can have their own drawbacks