Equity release

[simmo]

Does anyone have any experience or knowledge of equity release?

The mother is thinking of doing it to get some funding for house projects and has asked for my advice.

[Desert Orchid]

From the Which? site:

Equity release schemes are designed to be a lifelong commitment, so, if you change your mind, need to move house or want your equity for something else later, you could find yourself seriously restricted. If you do take one out, you should consider checking to see if you can get a better deal once the early-repayment charge period has ended. This is particularly true at a time of historically low interest rates.

Read more: https://www.which.co.uk/money/pensio...u-ap9jq6x38470 - Which?

Based on a £250,000 property, the graph below illustrates the way your equity release debt could grow over time, reducing the equity you're left with. It shows how a debt of £75,000 increases over time, compared with releasing the same amount using a home reversion scheme. The lifetime mortgage debt accrues at a fixed annual interest rate of 5.5%. Through the reversion scheme in this example, releasing the £75,000 means relinquishing 70% of the property's value.



(The graph mentioned didn't copy)

What are the alternatives to equity release?

There are several alternatives to equity release that may be more suitable, depending on your circumstances:

Unsecured loans

If the sum you want to borrow is small and you can meet repayments out of retirement income, it might be cheaper to take out an unsecured personal loan.

Mortgage extensions

If you haven't paid off an existing mortgage by the time you retire, it may be possible for your current lender to extend the term for another five or 10 years. Not all lenders will deal with those aged over 65, however.

Retirement mortgages

Increasing numbers of lenders are offering retirement interest-only mortgages, where you can pay the interest but not the capital each month. Some lenders don't have a maximum age at which you can apply, making them an interesting alternative to equity release.

Downsizing

If you need to release a substantial sum, selling your house and moving somewhere smaller could be an option. The costs can be high though, with agent fees, removal costs and stamp duty to consider.

Benefits and grants

Those on a low income who are borrowing for home improvements or conversions to deal with disability may qualify for local authority grants.

Where can I get equity release advice?

Before using equity release, seek professional advice. Advisers should hold ER1, CeMAP and CeRER qualifications. You can find these through the Society of Later Life Advisers. The Which? Money Helpline has a team of qualified experts that can help answer your questions on equity release. Try Which? and speak to one of our experts.

A free alternative is the charity StepChange, which compares providers and can arrange an equity release deal for you through a StepChange Financial Solution’s adviser.

Tips for choosing the right equity release scheme

Speak to an independent financial adviser before deciding whether to take out an equity release scheme, and get independent legal advice.

Explore other options and find out how equity release would affect your entitlement to state benefits.

Borrow the minimum amount you need to or choose a drawdown scheme to give you the option to borrow money as and when you need it.

Consider taking out a scheme that lets you make interest payments each month if you can afford to.

Choose a scheme with no early-repayment charges or ones that apply only for a limited period

Read more: https://www.which.co.uk/money/pensio...u-ap9jq6x38470 - Which?

[simmo]

Cheers DO, which was certainly one of my planned stops.

[Desert Orchid]

No problem simmo. I've edited the above post to include a section (blue) that didn't copy over for some reason.

[Maruco]

Is it because she’s planning to buy property for rental income Simmo?

[simmo]

Is it because she’s planning to buy property for rental income Simmo?

No, it's to release some cash to do some home improvements, badly needed work around the house that hasn't been done for 30 years.

We've had a good look round now and have an idea of the route(s) we want to look into but always willing to hear another opinion/thought.

[Maruco]

Ah okay Simmo. In which case I'm not of much use.

[Euronymous]

My mortgage is paid up in a couple of years and I'm thinking of doing this myself and retiring on the proceeds added to the bankroll i've built up in recent years.

[simmo]

My mortgage is paid up in a couple of years and I'm thinking of doing this myself and retiring on the proceeds added to the bankroll i've built up in recent years.

I wouldn't bank on it - I was thinking much the same myself but they are keener on giving them to folk who are already retired (preferably 70) - you'd basically be paying an interest only mortgage for a long time if you took it out earlier and you can only release something like 40% of the value of the property.

For example, I worked out that if my mother (70), lives for another 15 years, took out £50000 - she'd have to either pay £125 interest each month (£72500), or pay £75000 at the end.

[Tout Seul]

Shark infested waters!
You are doing the right thing in researching thoroughly.

[Maruco]

My mortgage is paid up in a couple of years and I'm thinking of doing this myself and retiring on the proceeds added to the bankroll i've built up in recent years.

You’d need to think carefully how you do that Euro. Quantativeasing is just round the corner, so you’ll likely be paying to keep money in a bank or building society sometime very soon.

Pension income and any other forms of investment such as rental property that gives you a regular income is the only way. Cash at hand will reduce in value, and you’ll need a way of making money grow in real terms, plus the equivalent growing income you’ll need well into your retirement.

[Euronymous]

My mortgage is paid up in a couple of years and I'm thinking of doing this myself and retiring on the proceeds added to the bankroll i've built up in recent years.

Mortgage is now paid up but life comes at you doesn't it.

So, I was working for TNT Express when I posted the above and towards the end of 2020 they were taken over by Fedex. Not good, harsher management system which was not good for me as I tend to butt heads with those types and to top it off in early '21 Brexit practices came to the Logistics industry and I was told my hours would alter, and duties. I rowed with my line manager, I even punched a monitor - I was fired. Luckily I'd knuckled down on the punting since leaving the Railway in 2013 and had built up a reasonable bankroll (12k ish). So, it was Feb '21 by this time, I was coming up to my 54th birthday and I thought I'd just have the Summer off and look for part-time work in the Winter. Then Cheltenham and Minella Indo happened, I had my best flat season ever, I almost doubled the bank roll.

In short I haven't worked since I left Fedex, I've had a bad year on the horses this year, my money is running out (not helped by Bitcoin crashing) and I need to return to work.

So the options are get a part-time gig (no more than 20 hrs a week) that I stay with or a full-time job until April and have the summer off again? Oh, I also get a small pension from the Railway. Not much but it helps considering my outgoings are relative bubkis with the Mortgage paid off.

Oh, and punting wise my lifetime roi is just under 13% - but variance happens, I'm negative this year but if history is anything to go by there's a 20% year round the corner. Oh PPS sort of, I've been diagnosed with non-aggressive Prostate Cancer. It's localised inside the Prostate and the advice is just to monitor for now.

Christ, why am I writing all this - I've been posting here for 17 years and never gone that much into life issues. It's a bit cathartic, I'm not the type who can just talk about this with family, they wouldn't understand the betting side to this for a start. I don't want to work again but kind of have to, I don't really think of the Big C - am I in denial? Thanks for reading, I think I just needed to get it off my chest.

[simmo]

Regards the job front I can sympathize, I haven't had a decent job since march '20. Think my age has something to do with it but I try to keep positive and think that a new job is just around the corner.

[barjon]

Hi Euro,

It’s something of a privilege for us that you post your story on here. Although I’m later on the site than most you’ve always struck me as a very level headed person and well appreciative of life’s ups and downs (an essential requirement on the betting side ). All that comes over in your story where you are obviously focussed on smoothing out the rough ground under your feet at the moment rather than bemoaning your lot. That’ll serve you well. All the best.

[Marb]

Mortgage is now paid up but life comes at you doesn't it.

So, I was working for TNT Express when I posted the above and towards the end of 2020 they were taken over by Fedex. Not good, harsher management system which was not good for me as I tend to butt heads with those types and to top it off in early '21 Brexit practices came to the Logistics industry and I was told my hours would alter, and duties. I rowed with my line manager, I even punched a monitor - I was fired. Luckily I'd knuckled down on the punting since leaving the Railway in 2013 and had built up a reasonable bankroll (12k ish). So, it was Feb '21 by this time, I was coming up to my 54th birthday and I thought I'd just have the Summer off and look for part-time work in the Winter. Then Cheltenham and Minella Indo happened, I had my best flat season ever, I almost doubled the bank roll.

In short I haven't worked since I left Fedex, I've had a bad year on the horses this year, my money is running out (not helped by Bitcoin crashing) and I need to return to work.

So the options are get a part-time gig (no more than 20 hrs a week) that I stay with or a full-time job until April and have the summer off again? Oh, I also get a small pension from the Railway. Not much but it helps considering my outgoings are relative bubkis with the Mortgage paid off.

Oh, and punting wise my lifetime roi is just under 13% - but variance happens, I'm negative this year but if history is anything to go by there's a 20% year round the corner. Oh PPS sort of, I've been diagnosed with non-aggressive Prostate Cancer. It's localised inside the Prostate and the advice is just to monitor for now.

Christ, why am I writing all this - I've been posting here for 17 years and never gone that much into life issues. It's a bit cathartic, I'm not the type who can just talk about this with family, they wouldn't understand the betting side to this for a start. I don't want to work again but kind of have to, I don't really think of the Big C - am I in denial? Thanks for reading, I think I just needed to get it off my chest.

Best of luck, especially with your health.

My mum was diagnosed with skin cancer a few months ago. She's been told she has to wait a year to have it removed from her face.

Seems like a long time when you know its life threatening if its spreads.

The NHS is in the worst state its been for a long long time.

[Grasshopper]

Mortgage is now paid up but life comes at you doesn't it.

So, I was working for TNT Express when I posted the above and towards the end of 2020 they were taken over by Fedex. Not good, harsher management system which was not good for me as I tend to butt heads with those types and to top it off in early '21 Brexit practices came to the Logistics industry and I was told my hours would alter, and duties. I rowed with my line manager, I even punched a monitor - I was fired. Luckily I'd knuckled down on the punting since leaving the Railway in 2013 and had built up a reasonable bankroll (12k ish). So, it was Feb '21 by this time, I was coming up to my 54th birthday and I thought I'd just have the Summer off and look for part-time work in the Winter. Then Cheltenham and Minella Indo happened, I had my best flat season ever, I almost doubled the bank roll.

In short I haven't worked since I left Fedex, I've had a bad year on the horses this year, my money is running out (not helped by Bitcoin crashing) and I need to return to work.

So the options are get a part-time gig (no more than 20 hrs a week) that I stay with or a full-time job until April and have the summer off again? Oh, I also get a small pension from the Railway. Not much but it helps considering my outgoings are relative bubkis with the Mortgage paid off.

Oh, and punting wise my lifetime roi is just under 13% - but variance happens, I'm negative this year but if history is anything to go by there's a 20% year round the corner. Oh PPS sort of, I've been diagnosed with non-aggressive Prostate Cancer. It's localised inside the Prostate and the advice is just to monitor for now.

Christ, why am I writing all this - I've been posting here for 17 years and never gone that much into life issues. It's a bit cathartic, I'm not the type who can just talk about this with family, they wouldn't understand the betting side to this for a start. I don't want to work again but kind of have to, I don't really think of the Big C - am I in denial? Thanks for reading, I think I just needed to get it off my chest.

Sorry to hear the health news, Euro - hope it all goes positively for you. Good luck with your treatments.

If it's any consolation, your ROI over a lifetime comfortably outstrips mine.

[chaumi]

It’s something of a privilege for us that you post your story on here.

Couldn't have put it better any other way. It's a privilege that anyone would share this type of personal-level stuff.

Something I noticed over the last year here. Although I went many years as a member without frequenting the forum (something I kind of regret, while also noting that regret is a - fairly, in most circumstances - wasted emotion), and (good) forums are well-noted for their community feel, and while noting that some of us don't know each other personally outside of words in posts...TH has the feel of something more like an extended family. It feels like kind of an honour to be a part of.

That's surely the mark of a special forum. And anyone that can display a level of vulnerability and trust in showing deeply personal info to 'strangers' is often 1) highly worthy of that trust in return, and 2) displaying their own strength of character and self-actualization.

[an capall]

It's okay not to be okay, especially here.

On equity release: I helped my parents organise 40K from their home (paperwork, bank meetings etc) about 20 years ago, based on a 15 year horizon for repayment in a lump sum or the loan rolls over indefinitely. At the time they thought they'd both have popped their clogs by then. When 15 years was up they owed close to 90K without realising. I happened to see some correspondence from the bank one day and they (bank) were happily compounding the loan balance at around 6%. Now approaching 90 it took me a long time to persuade Dad to retire the loan from an inheritance he'd recieved in the mean time. He just couldn't understand/remember what he'd signed up for.

If I was asked now I'd only advise an elderly person to do this if they nominated a trusted enduring power of attorney to make 'later life' decisions. Otherwise the bank may get it all.

[simmo]

I helped my mum organise some equity release on her house but made sure she took the option of paying the interest on it monthly (about £60 for £30k) in order to ensure a life ending amount wasn't worth more than the house!

[Desert Orchid]

Wishing you all the best, Euro.

About 10 years ago (maybe 15?) my eldest brother - who is now 71 - confided in me, with obvious angst, that he'd been diagnosed with prostate cancer. Our mother had died from cancer a number of years earlier so we both knew he had good reason to be worried yet all I could find myself saying to him was, "Well, if you're going to get cancer then prostate is the one to get."

I was aware that the survival rate was good. He got a procedure and has been clear since so stay positive.

Last year my brother-in-law was diagnosed too and he's been told it's extremely early and he's getting meds (not sure which) and being monitored quite frequently so he's feeling quite positive too. It's so much better than the likes of pancreatic cancer which, I've been told, doesn't really have any symptoms until, for many, it's too late.

I think I also asked about ER some time back and vaguely recall being told it isn't for everybody. I'm not sure who it is for if crippling interest can accrue. You have to wonder if it should be allowed.