Equity Release - any experience of it?

[John K]

Been looking at retirement and pensions because if I wait until the official retirement age I will not be able to enjoy any of it so I was looking to see if there was anything I could do to accelerate things.

If I can stop literally wasting money on toys for a few years I will be able to box off the mortgage which means we will own the house outright.

Linda and I will have no family or children to worry about, we are both last in the family lines. And it was this realization that made me think what is the point of leaving it all to various charities (including the "Home for Prematurely Bewildered Westie Owners") sure I will donate a decent chunk, but why everything..?

So a TV advert (so ashamed at that statement) made me wonder about Equity Release - it might liberate a chunk for me to play with in my later 50's and still leave a decent extra contribution to the pension pot for Linda to live off later.

I do realize there will be catches and that folk will be making a shed load of cash at our expense - but if you are eyes open to that, what are the pros and cons?

I will get paid for financial advice before doing anything - just wondered if any body here had an opinion...

And yes - asking if anybody has an opinion on this forum is pushing at an open door 

[Wobblyprop]

I totally agree with trying to retire early while you can still enjoy it.  Pensions are so much more flexible now - make sure you are on an updated scheme.  From age 55 it becomes so much easier to do what you want.  Sounds like you might not be there yet tho' . Equity release doesn't really appeal to me, but it might if I had no pension.

[Gerry H]

43 minutes ago, John K said:

Been looking at retirement and pensions because if I wait until the official retirement age I will not be able to enjoy any of it so I was looking to see if there was anything I could do to accelerate things.

If I can stop literally wasting money on toys for a few years I will be able to box off the mortgage which means we will own the house outright.

Linda and I will have no family or children to worry about, we are both last in the family lines. And it was this realization that made me think what is the point of leaving it all to various charities (including the "Home for Prematurely Bewildered Westie Owners") sure I will donate a decent chunk, but why everything..?

So a TV advert (so ashamed at that statement) made me wonder about Equity Release - it might liberate a chunk for me to play with in my later 50's and still leave a decent extra contribution to the pension pot for Linda to live off later.

I do realize there will be catches and that folk will be making a shed load of cash at our expense - but if you are eyes open to that, what are the pros and cons?

I will get paid for financial advice before doing anything - just wondered if any body here had an opinion...

And yes - asking if anybody has an opinion on this forum is pushing at an open door 

Why won't you be able to enjoy retirement? Downsizing not an option? Wait, let the property continue to appreciate (for your benefit) keep the mortgage going so you can still enjoy your toys until you feel its the right time, then sell up, stash your loot and rent in a less expensive area until you drop dead.

Moneysavingexpert's always a good place to start:

http://www.moneysavingexpert.com/family/death-plan#equity

Trouble with getting old, pensions, equity release, etc. is, you don't know how long you have to enjoy any dosh. You sound as if you already have a date for shuffling off your mortal coil.

Crystal ball owners, apply here

 

[geoffd]

There are a lot of scams in this area, and some of the schemes mean that you could lose your home if you live long enough.  A friend of ours lost nearly everything.  So do be very careful.

Geoff

[Dave Eastwood (Gadgetman) - Club Chairman]

Health reasons, 

[John K]

43 minutes ago, Gerry H said:

Why won't you be able to enjoy retirement?

Dave nailed it, I've got MS which doesn't really shorten your life, it just slowly disables you.

To quote my consultant (who I think is ace BTW) "it doesn't kill you, it just makes you miserable" so I need to walk the line between having a hoot while I can still get about but stashing enough away so I can get old, cantankerous and dribbly (not one person dare say "too late") on the pension.

41 minutes ago, geoffd said:

and some of the schemes mean that you could lose your home if you live long enough

And that is exactly why I do need to be careful. I can see that there might be a time limit. The Equity release mob might get a bit impatient if I bought in at 55 and then clung on limpet like for 30 more years.

[Gerry H]

Really sorry to hear that. It throws a completely different light on how to plan things.

Trouble is, once someone's got their hooks into your biggest asset with a potential of 30 years, how might the legislation, governing equity release, change in that time? If the equity co. goes bust, or sells their property portfolio, might the new company start getting heavy? Too risky IMO.

Somewhat contentious but an alternative: At some point, presumably, you will need help with care? If you have assets/cash all your endeavours/contributions will be disregarded and your assets may need to be used. If you've given up your toys, and paid everything up, as is the (sort of) responsible thing to do you'll end up with footing a big care bill. If you enjoy life to the full, liquidate your assets, go into rented and be a JAM, you may get on the benefits bandwagon. 

Difficult situation and thankfully, one I'm not au fait with (touch wood).

[John K]

1 hour ago, Gerry H said:

If you've given up your toys, and paid everything up, as is the (sort of) responsible thing to do you'll end up with footing a big care bill. If you enjoy life to the full, liquidate your assets, go into rented and be a JAM, you may get on the benefits bandwagon. 

You have just described my parents situation exactly..!

When they decided their home was too much for them, they sold it for a modest amount which gave them just enough to buy into a ExtraCare retirement village. Because buying a 95% stake in their bungalow almost cleaned them out, the state stepped in and is paying for virtually everything..!

But in the same village there are pensioners who are the exact opposite and have lots of savings, this means the state pays for nothing and they have to pay for all the goodies folks in my parents situation get for free... Life really can suck.

To be honest a retirement village where you can be independent but 'supported' is probably the best option once I turn 60 especially when we add in the fact my wifes mental faculties are deteriorating like my physical ones are (the standing joke is if you spliced us together you would get one normal healthy person).

So I will do a bit more digging, but perhaps my attention should go towards getting into the sweet spot between buying a managed place yet being supported by the government.

Is that cynical? Probably very... I am a little ashamed of my self but not enough to stop me from considering it 

[Olliebeak]

As usual with anything financially related the sector is full of scammers , one is that you sell your home to an equity release scammer for considerably less than the market value with a promise that you can stay in your home. The equity release scammer uses borrowed money to buy your property , then goes bust or moves on another more lucrative scam, the bank or other lender then forecloses on the arrangement  and sells your property to get their money back.

You get kicked out of the home you were promised for life.

I think these scammers should be added to the list of persons, bankers, financial advisors, energy firms etc etc  ,  who come the revolution will be put up against the wall.  

[John K]

10 minutes ago, Olliebeak said:

I think these scammers should be added to the list of persons, bankers, financial advisors, energy firms etc etc  ,  who come the revolution will be put up against the wall. 

Dude, say what you feel, don't hold back 

[darve]

If you would like to release some equity in the immediate but fairly short term - why not just release some equity with a normal residential mortgage? You can take residential mortgages into retirement age these days too

Sounds like you have plenty of equity so remortgaging (presumably when your fixed rate ends) would work if you have a low LTV. Rates are very advantageous at the moment (but will go up at some point so keep that in mind)

You would need a mortgage broker to do this. I can give you the contact details of the one I use. She is very good and gets all of her fee from the lender.

Doing such a thing as this doesn't tie you into something for the rest of your life. In reality, only the period of the fixed term

[Gerry H]

50 minutes ago, Olliebeak said:

I think these scammers should be added to the list of persons, bankers, financial advisors, energy firms etc etc  ,  who come the revolution will be put up against the wall.  

No room in the tumbril. It'll be full of ambulance chasing lawyers and European commissioners

[John K]

18 minutes ago, darve said:

Sounds like you have plenty of equity so remortgaging (presumably when your fixed rate ends) would work

This is my dilemma...

I don't actually have a 'mortgage', I have effectively been given an overdraft for the value of the house on my current account. I'm sure its more complicated than that, but it seems to behave that way. It's sort of like an Offset but way less strict 

I got the 'mortgage' days before all the banks crashed when they were giving away stupid deals / money / credit. And the overdraft rate is pegged to the base rate.

I won't says what my monthly interest is because I am unpopular enough as it is - but its criminally low. And I know it is a good deal because at random times the bank tries to 'trap me' into cancelling this deal by "not replying to a letter within a given time"

So going for a traditional mortgage would be quite a leap over the flexibility I've had recently - but I totally understand its another thing to put into the mixing bowl

[darve]

In that case, draw our a load of cash and burn it all through the xflow

[TAFKARM]

Sounds like only a decent IFA can help you really. Good luck whatever you do.

Why not sell the house and invest it all in one of those new fangled sporty diesels? Pace, and economy.