Equity Release

[goodgoalie]

Has anyone on AB gone through the process of equity release, ie borrowing money against part of their property? I've read quite a lot about it but most info seems very off-putting, and what seems to be one of the largest companies - Key - charge nearly 2% of the sum 'released' or £1,499, whichever is higher, plus interest is piling up, even though you're not paying anything back as you would with a mortgage. Seems extortionate, and I fear there might be small print that is quite punitive when the property is finally sold. Any personal experience would be useful. Thanks.

[TonyV]

Not personal experience, but thought about it and dismissed it as not the best way of borrowing money after having struggled to get ourselves mortgage free.

[goodgoalie]

Yes, I'm sure that's the case, Tony, but things are deteriorating and tonight I almost felt like joining theLand on the 'I'd like a chat' thread....

[TonyV]

You should have joined Theland's thread, although I think it's finished now. I'm away now, but sure we'll chat again, wishing you a peaceful night.

[EDDIE51]

Bad idea! Makes it near impossible to sell the house if you need to . In effect you no longer own the house , the equity release company does.You become a tenant in your own house!

[Canary42]

Sorry, no personal experience. Some alternative suggestions here.

https://www.which.co.uk/money/pensions-and-retirement/youre-retired-working-on-benefits-equity-release/equity-release/is-equity-release-right-for-you-ap9jq6x38470

[Maydup]

Is downsizing an option for you? Could you manage in a smaller property and release the eqiuty that way?

If not find some independent financial advice to help you through releasing some equity on your property. There are schemes where the company doesnt own your home in full, but the debt sits and grows gradually against the value once you sell. Tread carefully, but dont be put off completely.

[johnk]

Think about what happens if the company goes bankrupt and ''your'' house becomes an asset of the liquidators!!

[woofgang]

when houseprices were going up steadily it was a good option....not so much now.

[fiction-factory]

Do you have children that you would like to pass the house on to as an inheritance?. If not then equity release makes some sense provided it doesn't need to be repaid until death and you can continue to live there in the meantime. But if you wish to pass on an inheritance then even a partial equity release where you borrow say £20000 can mean that up to £40000 has to be repaid in around 10 years time, and this can become up to £80000 in 20 years. Also the equity release people can require you to carry out some maintenance tasks as a condition of the loan. If you do have children and want them to inherit something I suggest you consider seeing if they will lend you some money against the value of the property as an alternative

[goodgoalie]

Thanks for your replies. The more I look into this, the worse an option it seems. 'The debt sits and grows' is what, more than anything, puts me off, and I watched the Martin Lewis Show where he said that at 4% interest in 14 years you owe double what you 'released'.
I have no children to leave the house to, but even so the terms seem pretty punitive. Would really like to speak to someone who has actually gone through with it.

[fiction-factory]

I think you'd be lucky to get interest at only 4% for a partial equity release- it'd be nearer 6% I think.
I think it is worth considering equity release though if you have no partner or dependants that you want to leave an inheritance to. You can't take the house with you so if you enjoy living in it and don't want to downsize then I suggest you consider it so you can get some money now to help you be much more comfortable in your remaining years- but shop around and take advice from CAB or legal advice to make sure you can stay there until death and there are no onerous conditions

[fiction-factory]

There may be Legal fees too on top of the product/introducer key

[Everhelpful]

DON’T DO IT,gg, Personal experience,released £11000,8 years later owed £45000,that was with Aviva who I worked for.

[fiction-factory]

^That seems an extraordinarilyy high interest rate, Everhelpful. But if goodgoalie doesn't have to repay anything until after death and set up costs are far less than the cash released and he can stay there for ever, does the size of the finally debt really matter?

[Everhelpful]

FF,I agree with what you say about staying there forever,if you have no dependants,it is probably a good thing,however in my case My Wife was adamant she wanted Double Glazing so seemed a good idea at the time,unfortunately a “Colleague” who I trusted,set everything up in his favour for extra Commision,hence the high Interest,needless to say,we don’t exchange Xmas Cards!! Lesson learned.!!

[fiction-factory]

I agree that in your circumstances partial equity release was not the way to go, Everhelpful!

[Everhelpful]

Thank You,FF,btw,my Daughter and Son-Law paid it off for me,for which I am eternally grateful.

[KateBarrington]

Yes. I did that. I went to a private mortgage lender. I think that dealing with private money lenders is more convenient than with bank institutions. First, they use a tailored approach. Usually, private lenders' underwriting is based on your equity - not your credit. The application process was very simple and hassle-free. There was no income verification and no credit score requirements. For example, here in Toronto it does make more sense to consult with private lenders, but not with banks.