Equity Release

[Deleted member 18243]

What are the pros and cons of Equity Release? I've only ever heard the cons.

I've been told by many that I should go for Equity Release, through a reputable organisation of course, to free up a ton of money so that I can live a life of luxury.

I'm not likely to be persuaded; Equity Release has "Dodgy" written all over it, just as Timeshare and Crypto Currencies do.

Any experiences folks?

 

[Justin Passing]

One single bloke I know has done it. Not much pension, and COPD, so has to enjoy his life while he can.
I considered buying his house and renting it back to him but I couldn't rely on him to pay the rent...
So far, the amount he's lost is high.

Why not just earn some money? You're quite good at writing political fiction -?
Affiliant link commissions from a Daft Conspiracy blog?

Or you could earn pin money part time, say £20k pa, upcycling some old junk. It's all the rage.

 

[diy_fun_uk]

I've posted on here about equity release before, it's definitely something I'd consider. Here's why. I live alone, no family in terms of partner and kids. That's unlikely to change. I'm spending years (and a lot of £££) paying off a mortgage on my house. So, in my latter years, I'll be living in a house I've fully paid for but can't tap into to recoup some of the financial input from previous years/decades. When I peg it, the value of the property after whatever deductions (probably some taxes that go to lazy sods who sit on their ar5e all their life) will be divided between whoever I left stuff to in my will.

So, given I don't have any immediate family to leave my house to, I can see a lot of sense in equity release, assuming you choose a reputable company and do all the relevant research. e.g. some folk talk about the high interest rates you rack up. However if you could be 100% confident you wouldn't be turfed out of the house and that any interest etc would only need paid when you peg it, then who cares? Not as if it'll be your issue when you're 6 foot under.

 

[JohnD]

What are the pros and cons of Equity Release? I've only ever heard the cons.

I've been told by many that I should go for Equity Release, through a reputable organisation of course, to free up a ton of money so that I can live a life of luxury.

I'm not likely to be persuaded; Equity Release has "Dodgy" written all over it, just as Timeshare and Crypto Currencies do.

Any experiences folks?

How much money would this reputable organisation make if you took their advice?

 

[motorbiking]

Equity release is a kind of reverse mortgage. You are taking out a loan for the money secured against your house. The loan can be a draw down (better) or a lump sum. The downsides of the lump sum are that the interest starts to build the moment the money is sitting in your account, so you are borrowing money at say 6% and getting say 2% while its in your bank.

over say a 10-15 year period this interest gets added on. Depending on the growth in value of your house,

For example you own a house worth £400k, you withdraw 50% via a lump sum, within about 15-20 years the whole property is gobbled up. They can't claim more than the value, but the game is to end with your property.

There are also lots of commissions and fees earned which normally go on the drawdown, earning compound interest.

 

[Old Salt]

There is only set of people who make money from equity release and it ain’t any of us!

 

[Brigadier]

Just leave it all to a mate, mate

 

[JohnD]

If you become frail and want to move to something else, you can't sell your house and use the money, because half of it belongs to someone else, and there will be fees and charges, and possibly accumulated interest to pay off as well. Worst case, there may be nothing left.

 

[JohnD]

With luck, you will not suffer what happened to many older people in Putin's Russia. They had a right-to-buy of their state-owned homes, and bought using a lifetime loan from local lenders, giving them the right to live in it rent free until they died.

Surprisingly often, they had fatal accidents shortly afterwards.

 

[Mottie]

My mates parents in law took out an equity release on their home about 15 or more years ago of £30k. The FIL has since died so only the MIL left now. They never used it and just put it into a building society as a reserve in case they ever needed it. Their house is probably worth around £700k now so that £30k that they never used is going to cost them dearly.

 

[motorbiking]

That’s nuts they should have just secured an overdraft facility. No doubt a nice man in a suit arranged the whole thing and made it no trouble at all.

 

[blup]

The only pro of equity release is living a long time in a deflationary property market. The schemes only exist to make profit from gullible people or maybe those that desperately need a lump sum.

Blup

 

[Fred Blogs]

It's a scam. I did it years ago when I was about 56 57. My house was worth roughly 250,000. They gave me 45, 000. Bottom line is they bought my house for a pittance and it would have only increased in value from that point. I did come into some money not long after and I bought it back but that cost me 65.000. I will admit I needed the money at the time and I had no idea that the money that I used to buy my house back was coming. You get more the older you are. My present home is worth 300,000 and just for a giggle I used the Age Concern calculator and they would give me 114,000 and I am now 72. Needless to say I didn't pursue that any further.

 

[Deleted member 18243]

Thanks all.

 

[Vinty]

With luck, you will not suffer what happened to many older people in Putin's Russia. They had a right-to-buy of their state-owned homes, and bought using a lifetime loan from local lenders, giving them the right to live in it rent free until they died.

Surprisingly often, they had fatal accidents shortly afterwards.

Urban legend.