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Equity Release

MikeRC 14 3.6k United Kingdom
11 Apr 2017 7:55AM
Hi....who has entered or even considered an equity release scheme ?

I'm fast running out of money and my pension barely covers my day to day running expenses so I'm considering equity release....Is it a good idea?....or a bad idea ?

Who's done it and regretted it ?....which is the best company to deal with ?
....What are the pitfalls ?

.....any advice appreciated....thanks....Mike

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capto Plus
7 5.9k 13 United Kingdom
11 Apr 2017 8:15AM
Take lots of expert advice, and then some more. It can be right for some people and a very bad choice for others. Don't be too influenced by the rose tinted adverts.
cats_123 Plus
15 4.9k 29 Northern Ireland
11 Apr 2017 9:09AM
My f-i-law took equity release some years ago...Now managed by Aviv's. He has been able to take drawdowns at various intervals and he paid extra (800ish) to protect 25% for inheritance. The interest rate is between 5-7%. The crux is how long you hope to live and whether you want to leave any inheritance???

My personal view fwiw.... You only live once, and you need to make the best of your health while you have it.

Good luck
Tianshi_angie 4 2.7k England
11 Apr 2017 9:52AM
I took equity release some years ago. Was it a good decision or a bad decision? For my offspring they will probably think it was a bad one, but for me it has meant that I can afford expensive repairs - like the holes the birds made in the thatch - and an occasional holiday without worry. When I look at how my kids spend their money (although I love them all dearly) I have no regrets as I know it has made a tremendous difference to me in terms of peace of mind and staying in a house which I love, whereas the extra 00s of pounds they would have had would just mean more new kitchens and unnecessary extras, whereas for me the money has meant that I can afford things I need as averse to 'want'. It is your money, you have worked for it so why not enjoy it. To some extent I was also aware that above a certain amount the tax man would take a considerable part of any money that my property would bring, so it was better I had it than give it to them. That's how I see things. But every one sees things differently.
thewilliam2 2 1.3k
11 Apr 2017 10:53AM
What happens when folk live a lot longer than average? Would the lender evict when the house goes into negative equity?
Tianshi_angie 4 2.7k England
11 Apr 2017 12:03PM
I suspect that long before the time when that is a likelihood you (as the owner of the house) would be aware that it is a possibility. You are sent yearly statements so that it is always very clear how you are faring and it is easy to make a comparrison with how much the ERM is and how much the current value of the house is. Most of the time the property's value increases so the chances of that happening are diminished. But as with all financial commitments it is up to you to manage the situation.
AlanJ Plus
6 1.0k England
11 Apr 2017 1:02PM
It had bad press years ago but I believe it's a lot better regulated now. The max. loan v property value plus fixed interest rate and the possibility to protect against negative value can give peace of mind.
I'm coming up to retirement and we've long thought that at some point we may downsize but we really love the house we are in and to spend our retirement somewhere else would fill me with regret so we are looking at the pros and cons of this. My wife and I want to leave our children a decent lump in due course but it seems to me that this is a preferable route to downsizing unless you find your perfect new home. Both will reduce the estate but this way you don't have the stress and expense of moving. You need to do your research and produce a model based on the facts. e.g. with Aviva's current fixed rate of (I think) 4.5% if you don't pay the interest the debt doubles after 16 years and triples after 25 years with the interest compounding. Of course in the same time frame the value of the property will in all probability increase by a similar % rate (hopefully for the kids!!).
There are generally options for payment of all or part of the interest and or capital sum.
AlanJ Plus
6 1.0k England
11 Apr 2017 2:19PM
Take account effect of cumulative interest if the interest isn't paid.
On 30k after 10 years the interest is circa 16k
The next 5 years cost 12k
Above at 4.5%

So don't take sooner than you need to unless you know a dead cert, risk free place to invest at 4.5%plus
cats_123 Plus
15 4.9k 29 Northern Ireland
11 Apr 2017 4:02PM

Quote:What happens when folk live a lot longer than average? Would the lender evict when the house goes into negative equity?
no negative equity...The insurance company take the risk...

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