Looking for advice — we’re considering ways to access some home equity without remortgaging because the new rates are brutal.

[Sevo4]

We came across models where you share a small % of future house price growth instead of taking a loan.
Anyone tried this? Did it work out?

Sounds really dodgy.

How high are the rates you are being offered? And what rate are you leaving? Just allowing the the lending to continue on your providers variable rate without fixing is usually prohibitively expensive.

4.65% fixed seems common at the moment which historically doesn’t seem extortionate.

That was a thing years ago and no, it did not work out. It was a big misselling scandal of the 1990s.

https://www.google.com/amp/s/www.bbc.co.uk/news/uk-england-nottinghamshire-67122324.amp

I think the problem stems from the vast majority of the population not understanding compound interest and unexpected changes in house prices causing it to not follow whatever illustration the agreement was based upon, I'd imagine that longer lives than assumed and people wanting to move house could also bugger up the assumptions.

I don't know if they have taken previous bad experiences into account and this is something that is now lower risk but if so, be very very careful.

I would be amazed if any reputable lender would do shared appreciation mortgage given the huge costs of remediation from the last time this was available.

If you aren’t remortgaging are you looking at that as a second charge? You would need mortgage lender consent anyway I would imagine.

How much do you need for how long? You may be able to ger a loan secured on the property or a second mortgage/bridging type loan. They are all likely to be dearer than the mortgage but depending how much for how long might be worth it, if you don't want to increase the rate on the whole mortgage. Be very careful with these equity release type products they can work out extremely expensive or be total scams.

Thanks all — I really appreciate the caution being raised here, especially given the history with equity release and the shared appreciation mortgages from the 90s. Just to clarify, what I’m talking about isn’t a loan and doesn’t involve interest, compounding, or giving away a percentage of future gains. There’s no borrowing involved at all.
It’s more like shared ownership in reverse: instead of a buyer purchasing a share from a housing association, the homeowner would be able to sell a small share of their own equity at today’s valuation, with no obligation to buy it back unless they want to. They’d keep full control of the property, stay on their existing mortgage, and there are no monthly repayments.
I completely agree that anything involving someone’s home needs very strong consumer protections, which is why the focus at the moment is purely on making sure the structure is simple, transparent, and avoids the issues seen in the past. Still early-stage thinking, but I wanted to sense-check the concept, not sell anything. Really do appreciate the input — the caution is useful.

But what's in it for the buyer? Who would take it on? Or offer the product on a commercial basis?

If it's shared ownership in reverse, its normal to pay rent on the part you don't own. You say no payments are made.

In the case of a lifetime mortgage/equity release where the homeowner receives a lump sum but when the property is sold that lump sum plus interest is repaid. But you say its not a loan and there's no interest.

So you appear to be suggesting that I should give you tens of thousands of pounds in the hope that when you sell your property, possibly in a few decades time, it's worth substantially more so its worth me taking on the risk, ie the value has risen by more than I would have made with known investments like savings, S&S etc, the latter I could conservatively expect to double in value in well under 10 years.

Plus what about maintenance and condition of the property? What if you fail to keep it in good condition and the value is reduced due to this? The gain could in reality be a loss, especially if combined with a period of house price decline.

Also, what is your question?

The title of your OP appears to suggest you're looking to release money from your own home, but your follow up post sounds like you're looking to set up a product to offer commercially.

I don't understand how this would work. Can you link to the product you are considering?

This reminds me of the French woman who claimed to be the oldest person to have lived- a lawyer offered her deal on her house like that when she c was very elderly, confidently existing to outlive her, but then he died before ‘she’ did (was later discovered that was a fraud, and her daughter impersonated her so she didn’t really live to that age (118?). But too late for him…

That was Jeanne Calment who lived to 122 and was the world oldest women. The claim that she was actually her own daughter has been largely debunked. That lawyer did get a bad deal off her though.

Right so you want us to structure a business for you 🙄

So many issues with what you are suggesting, if you are serious go see serious lending/regulatory/property lawyers to discuss the structure. But having spent time dealing with the long term fall out of SAMs, this is not a product I would go anywhere near trying to create.

This is obviously an AI post. Ignore

Even if you did essentially sell part of your property now, there’s no way it would be allowed under your existing mortgage and so you’d need to remortgage anyway. And it’s highly unlikely any investor would invest without some liquidity event horizon - tying up capital indefinitely is a terrible idea, so I presume they’d want to be able to force a sale of their share at some point in future to get their returns.

The arrangement they entered into was (is?) quite common in France.

But it's spectacularly bad luck to do it with a 90 YO who ended up being the longest ever living person.