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.

Why not use the money if it's all you have

because it's a huge rate of interest and quite sickening really

If it's allowing you to stay in your current home in comfort, instead of scrimping and saving, worrying about bills and heating, then I don't see an issue.

The alternatives are move house, or live in poverty in a home that's potentially unsuitable for your needs. How is that better? And surely your children would want you to be happy and comfortable, not cold and worried about bills?

If you moved house could you get a full service move, so it's as easy as possible?

The children aren't a problem at all. There's a bit of a back story as to how we've ended up in this position.
I suspect an awful lot of people are doing without and juggling budgets. It's not newsworthy though.
Thanks for your thoughts.

In your position I would have a serious chat with the DC. Explain that if they can help you to downsize and move, so you can pay off your mortgage, then you won’t have to do equity release.

Downsizing/moving to a cheaper area would be far preferable for me than equity release.

Thanks, useful thoughts.

Basically if you live to a good age the equity in your house will probably be reduced to £0.

That isn't an issue for childless people but if you want to (or need to) downsize in the future or leave something to your descendants it's a bad idea.

Its occurred to me recently that if you do an equity release it "could" provide a way of gifting inheritance early to your kids without the worry that it will all be swallowed up in care costs. I dont know if that would still come under deprivation of assets etc when being assessed for care costs? I expect a loop hole such as this would have been blocked though. Interested to know if anyone has experience. My mum has done an equity release as she wanted a new bathroom and windows to make life more comfortable in her older age. Yes it will reduce the equity in her house but if she needs care, they wont get the full value of the house.

My parents had a couple of friends who did this. It ate the value of the house & the money released ran out and they were trapped in a too large house, skint again.

A friend's parents did this and then when one of them died there wasn't enough money in the house after sale for the remaining parent to relocate closer to their adult children whereas there would have been more than enough had they not sold. They didn't even really need the money and it was spent quite frivolously and I don't even mean decent holidays and days out which would have been worth it. It was a nightmare

would it be an option to make interest payments if you did ER? Someone I know is doing this so the loan doesn’t increase. If you consolidate your existing mortgage into an ER product the monthly payment may not be much more (or possibly less) as will be interest only rather than repayment, but you’ll be more liquid.
A mortgage advisor helped my relative get this set up. She moved house and needed a mortgage to afford a flat where she wanted to be, but as she was already retired her only option was to have an equity release mortgage. She makes monthly interest payments so the total loan stays the same.

Yes, from what I’ve seen, that’s a fairly common option. Making the monthly interest payment so that the borrowed amount doesn’t increase.

I think I’ve also seen, with some, that porting your debt is possible, but obviously with restrictions. So it doesn’t mean you’re necessarily tied to the same property forever.

As I said above, it’s not for everyone. I’m single and childfree, so it’s definitely on my radar as a possibility. I understand why ER gets a bit of a bad rap. The one thing I think I’d avoid more is buying a property in a “retirement” development. These seem to be really difficult to sell once someone has died.

If I didn’t have kids I’d definitely do this!
Am surprised that friends without kids don’t do it.
I don’t want or need an inheritance from my mother (in her mid/80s) and wish she would do just that and go on cruises while she is still mobile and compos mentis.
Free up the money and spend it!

Paying the interest is definitely a good idea, if you borrowed a lump sum which you put in a savings account to draw from, it would earn interest that would cover most of the cost of the monthly payment.

You could then draw regular amounts to top up your income or remove lump sums to pay for large purchases. I also don't know if there are products that you can draw from as and when or as regular monthly amounts up to an agreed amount and you only pay interest on the amount borrowed. Like an overdraft facility.

Equity release is at worst a total con, but at best an absolute lifeline…think of it like downsizing without moving. You get the benefit of the money now while you are fit enough to enjoy it. There is no point starving or freezing to death with nothing in the bank but a 500k asset is there?

but do a lot of research, not on here, to really understand what you are agreeing to

It’s a good idea if you can’t afford to get by, family don’t HAVE to get an inheritance and if they’re anything like me, would prefer to see you live out your last 20(ish) years above the poverty line and able to enjoy yourself.

I’ve told my mum to spend everything while she can, and if she needs equity release (I doubt she ever will) then I’ll buy her house from her. I would love an inheritance, but not at the cost of her loving life to the fullest

The 'lifetime mortages' are a much better idea. You get the house paid off and when you die, nobody owes anything but obviously noone gets the house either. The interest currently is between 6 and 8%

Interesting.

could you instead sell off garden ground for a building plot or sell a garage or rent out your driveway or garage to someone needing storage? what else could you do to increase your income?

The problem comes if you need to move at some point. Things like upkeep may become too much, or you may lose the ability to drive and need to be in a town. If you have lost too much of the equity, it might be unaffordable. Also you say you don't have the energy to move now, but it may become necessary in future and will only ever get harder. Equity release isn't always a terrible idea, but it is in most cases I have seen.