Equity Release....any thoughts or experiences please?

[bafta16]

Of course this is far from ideal but I'm wondering about it as an option.
Can't make more money, can't have a lodger. scraping by.

Not enough information as to whether it would be a sensible consideration for you.

Moneysaving Expert has a good article without any of the hyperbole you'll get on here about how they're the biggest con ever and should never be considered under any circumstances.

How equity release works and risks involved - MSE

My gut tells me it's a very bad idea but....

What information would be helpful please?

Do you have someone you want to leave a bequest to?

No: equity release the shit outa whatever you got

Yes: be VERY VERY careful.

Bumping your thread as I'm also interested in equity release. I have no children and only a small pension, so intending to utilise my major asset if possible.

I was told by a financial advisor that it was a pretty bad move - he did give the reason, but I forgot it, as I'm not likely to ever do it - but I remember my response was "wow, they don't tell you that on the adverts!"
So don't necessarily rule it out, but be very careful.

The MSE information I linked to above goes through everything you need to know.

I know they can be expensive but in some circumstance, they could well be the least bad option it entirely depends on your circumstance.

I'm unmarried, no kids, no dependents of any sort, not even a pet ....and it's on my list of "might do" when I'm retired.

My mortgage was paid off years ago, if my house remains suitable and I don't want to move, why not release some equity?

Say it's worth £300k now, I release £100k. On today's figures, with state pension (ignoring any other income I may have arranged, or savings), that's ten years really of extra living expenses.

Even if my beneficiaries have to pay 100% interest (probably) they're still left with £100k equity. But in reality it won't work like that, and if I do live that ten years the property value would increase, and if I don't I won't have spent all the money plus the repayment will be lower.

But I won't care, I'll be dead, and dead people don't have debt.

How old are you?

Roughly how much is your property worth?

The main concern is when will all the equity in your property be taken up? How will you afford to live after that?

I'm 70. I would have liked to leave an amount for family, but this may not be possible.

Worth 400 k but have a mortgage of 80k to pay.

Not sure I can carry on scrimping.

A relative took out an equity release plan about 15 years before she died. The debt is now nearly three times the value of the original loan, and is still going up every month until her house is sold (we are trying, but it's in an area with a huge number of houses on the market and low demand). There are debts for her care home fees too.

I suppose if you really don't have anyone to leave anything to, all that is less relevant, but if you are still relatively young now, what happens if the debt grows to greater than the value of the house while you are still alive?

Have you considered selling up and downsizing instead?

I think, hope, your family care more about your comfort than they do about potential inheritance.

Read the article, and speak to an advisor. It's a valid route and you're of the right sort of age for it.

I guess you've considered downsizing?

Thanks for replies. I don't feel strong enough for the cut and thrust and stress of a move right now.

Yes, my family are caring and concerned.

This is very much how I'm thinking.

Is downsizing out of the question OP? That is preferable to equity release, according to the MSE article.
If downsizing isn't an option, then equity release is - but the issue is the interest seems to mount up a lot, and can eat into your estate significantly.
But it also says in the MSE article - you need to consider yourself and your own quality of life first.

If you read the article, it does say that they usually come with a ' no negative equity guarantee', so the interest can't increase beyond the value of the property.

Also, only the estate is liable for the estate debts, the beneficiaries or family are not liable unless they have given personal guarantees, so there's no need to worry about that.

In theory, you could do equity release, gift the money away, and die leaving the debt unpaid. Though I suspect that the terms preclude that, plus they don't tend to release a high percentage of the value anyway so house sale would usually cover it.

Mind you, the housing market has been pretty stale for a few years now.

It's a while since I've dealt with one (residential property solicitor but I no longer have clients), but I'm pretty sure they have compound interest. Speak to an IFA and get an illustration of how the interest stacks up.

Might your family be able to help you with a downsizing move (helping you to dealing with decluttering, paperwork, viewings of a new property etc), if you don't feel up to doing it yourself? Or is your current property actually suitable to see you into old age: not too big, located near essential services, low maintenance building and garden, warm, low running costs, adaptable for reduced mobility and so on?

If it isn't, my worry would be that if you took out an equity release plan now, but in a few years really did need to move, you might find that you could no longer afford a more suitable property because too much of the equity had been eaten up the equity release and the cumulative interest. Your only option then might be to sell up altogether and move into rented - not necessarily a bad move, as it can be better to rent than buy a sheltered flat, for example, but it's always better to have choices.

And in any case, the older you get, the more daunting a move can seem (my parents left it too late, and were trapped in a totally unsuitable, huge, high-maintenance, wheelchair-unfriendly, isolated house).

I believe there is also an option involving taking out a mortgage. Depends how
much you need But it avoids the way interest mounts on equity release. Best to find a financial advisor I think to explain options. Might be money well spent in the long run

My Dad took out £15k on equity release when he retired at 65, in the clearly 90s. When he died, at 88, the loan was virtually as big as the house value. Auctioned off the house for £135k and there was less than £10k left. Now the upside, my mum lived for another 8 years, but as she had no money, her care costs were covered by benefits, but she had little choice where she was put. So be careful. If you can take the money in stages, not in one lump, it may last longer.

Equity release is nearly always a terrible idea. Why not sell the house and downsize. Then the money is still yours?

@exexpat thanks a thoughful reply. I'm happy where I am.Coincidentally I notice 2 neighbours having stair lifts fitted.

General rule of thumb is whatever you borrow will double every 10 years. So, borrow £20k, that becomes £40k after 10 years, £80k after 20 years, etc.

I think there are, mostly, terms in place now that mean that your debt can never be more than the property is sold for - ie your relatives won’t be responsible for any “negative equity”.

I think that, if you’re single with no dependents, then ER can be a consideration.

Thanks, helpful.

We looked into it for MIL (89) - she wanted to stay in her home but had run out of money to pay for the carers she wanted. She had to pay for financial advisor before she even considered it - don't know why but she wasn't allowed to do it except through an advisor. She no longer cared about an inheritance all she cared about was being allowed to stay in her home. She died before the process finished - it takes a few months.
Why not use the money if it's all you have and it allows you to stay in your home.