Equity Release Schemes

[Ric.ror]

Just out of interest (I've no intention of using one - they're a rip off) but were I to release a house of say £200 000 how much would I be offered?
I've tried the websites but they all ask for an email address and, as I said, I'm only being nosey

[SirOracle]

The amount varies according to your age,and also which scheme you select.

[anneasquith]

are they a rip off ric? I have toyed with the idea of making enquiries.

[Ric.ror]

Well I always imagine they would be
Trouble is I know if I give my email they never leave you alone

[SirOracle]

Anneasquith....Not a rip off but there are better ways to release money against the value of your house.

[anneasquith]

like what sir o ?

[SirOracle]

Remortgaging Anne

[Ric.ror]

I've just seen a post from 2011 which suggests something like 40%
That seems a rip off to me

[anneasquith]

sir o, the property is fully paid for. does that make a difference with re-mortgaging ?

[SirOracle]

Nope. It would likely make things easier Anne

[anneasquith]

thank you sir o, bank or building society ? may make enquiries.

[SirOracle]

That's where I would start if I were you Anne.

[Hymie]

My understanding of the way most of these equity release schemes work is that (using your example) suppose you want to release 50% of the capital – they will give you £100k (to spend as you please). However they may charge an interest rate of over 7%, which is quite high, given that it is effectively a secured loan (guaranteed on the house).

The problem is that the value of the house may not increase at the loan interest rate, resulting in the loan company getting more than 50% of the house when it is time to sell.

Let’s assume your equity release lasts for 20 years and over that time the average annual house price rise is 5%.

After 20 years, your house will be worth £531k, however the £100k loan at 7% will be £387k, so the loan company’s share of your house has increased to 73% from 50% because house price inflation did not match the loan interest rate.

If in the above example, the loan interest rate had been 8%, then the loan company’s share of your house would be 88% after 20 years - leaving very little for you.

[twix123]

Ric - Make your enquiries using a 'disposable' email address, then discard that address as soon as you want !

[Peter Pedant]

// are they a rip off ric? I have toyed with the idea .//

yes they are a complete rip off - 10% interest doubles the debt in seven years so if you are gonna live seven years ( and even I might with a history of colon cancer AND lymphoma aged 62 ) you can expect 100k

toy on Anne - I am certain you will defeat the statisticians


equity release is the most crap "investment" you can make
I know I have made a few

[Canary42]

Like most "buy now pay later" schemes, you really pay through the nose.

There's no such thing as a free lunch.

If it sounds too good to be true then it isn't [true].

[Peter Pedant]

.

Q // sir o, the property is fully paid for. does that make a difference with re-mortgaging ?///Sir O // Nope. It would likely make things easier Anne //

who is writing this ?

yes - - - - yes is the answer yes, it (=no first mortgage) makes it much easier to take money off a credulous old woman

Please someone report this answer

and then readers can actually witness good advice being zapped so as to leave totally crap advice on the thread


erm good advice may still be advice someone DOesN't want to hear

[sandyRoe]

How would a mortgage work, say 100k?

[ummmm]

What you on about PP?

The bank will only let someone re-mortgage if they fit the criteria.

[naomi24]

SirOracle, Re-mortgaging is not an option for the elderly with little income and no hope of meeting repayments. Spending the children's inheritance is.

[SirOracle]

Naomi......I of course agree that in the example you show a re=mortgage is not the answer.

However there are people with different circumstances where a re-mortgage could well be the answer.

Peter Pedant....I have tried but I cannot make head or tail of your ramblings on this subject. Is English your first language ?.