Equity release!

[colin wilkinsonParticipant @colinwilkinson75381]

I feel sure someone else will have investigated or done this and have constructive comments. I want to release the maximum amount and it does not matter how high the interest or how small the residual value at the fiinish as I have no children to leave it to. There is no mortgage outstanding and I am over 70. Will probably spend large amounts on wine, women and song and squander the rest!! Colin

[colin wilkinsonParticipant @colinwilkinson75381]

[jimmy bParticipant @jimmyb]

Sounds like a plan!

Jim

[Cabinet EnforcerParticipant @cabinetenforcer]

I'm afraid I have no constructive input, but when I saw the title I was expecting a thread on selling a shaper

[thaiguzziParticipant @thaiguzzi]

If you want to see how quick you can get through it, whilst living the life, and constantly being called "hansum man", and having a bevy of beauties 50 years younger than yourself on each arm, you could do worse than pop out here for 3-6 months…..

[PlasmaParticipant @plasma]

You need to find a good, independent financial adviser. Someone who can look at the options and give you the best advice.

I will be looking to do the same thing in due course, with the exception of soending it on women as the current head of domestic affairs may have something to say about that!

But having no kids and no mortgage means I can enjoy some of the cash I've pumped into this pile of bricks I live in.

Maybe a nicer car, or a few toys.

"Dreamin, I'm only dreamin……"

Plasma

[Martin King 2Participant @martinking2]

Having recently done this for my wife and I the only important comment I can make is that one should consider the option whereby you can access whatever sum is arrived at in installments as you need the money rather than take it all in one large lump. This REALLY mitigates the rate of the compound interest that accrues.

I know that the OP said this does not matter but it is just prudent to not pay more than necessary.

The amount released can be hugely increased if you really do not care about the rate of initial interest charged, we opted for an extra 0.25% and got another £30k avialable!

Also be very awrae that any "bail out" of the scheme in the first 12 years is VERY punitive.

We have no kids either and will use the dosh to ease our later years and have some fun, ie holidays which we never had before!

Cheers, Martin

[not done it yetParticipant @notdoneityet]

These schemes generally are only a money spinner for the company operating it. They are unlikely to lose even with a house price ‘crash’.

Good to spend all the ‘capital’ bound up in a house to avoid nursing home fees (later in life) using up all your life savings before you get any help from the state!

Likely cheaper/better to sell on the open market and rent, is my take on it.

[BazyleParticipant @bazyle]

Agree with NDIY but also find out what the capital gains catch is on it. The parasites operating the scheme will value the house at the absolute minimum they can citing every scratch and dent in the paintwork as excuses Then offer you likely 20% less so they cannot possibly lose money on it. Sometimes there are clauses requiring you to spend your money on the upkeep to their standards, even though it is 'their' property.

I imagine like mortgages the resulting title to the property is then traded on the investment market in blocks of thousands of houses sold as medium term investments to faceless corporations. The one thing you can bet on is that none of it is intended to be for your benefit.

[Peter G. ShawParticipant @peterg-shaw75338]

I understand the logic behind it but I really do wonder if it is the best policy.

As the years go by, you may find yourself in need of good quality care. Wouldn't it be better to be able to pick and choose rather than be dependant on "the council" to do it for you? Along the same lines what if you suddenly need a major operation and decide that you would prefer a centre of excellence rather than the local NHS hospital?

You have no dependants. But what about any other relatives? Now ok, I do understand that you might not want to subsidise your more feckless relatives, but you may have some responsible relatives who would appreciate a legup when the time comes.

What about any favourite charities? But in this context note that fixed sums are, I understand, better than percentages. Apparently, some charities, if left a percentage pore over the executors accounts to ensure that they, the charity, have extracted the maximum amount possible.

On a personal note, I would fight tooth and nail against equity release – it's my house and I neither want nor need someone else laying down the law. But then I do have a reasonable income and I appreciate that not everyone is as fortunate as me.

I think that what it boils down to is, do you want to risk spending up, and then throwing yourself onto "the council" bearing in mind that there are rules about asset deprivation.

Otherwise, I wish you well.

Peter G. Shaw

[Martin King 2Participant @martinking2]

Hi Bazyle,

Actually I disagree on a couple of points:

We had 4 independent valuations by estate agents, two of whom were aware that we were looking at ER, two who were not.

Valuations varied by less than 5%

We then submited our top numbers to the ER perople and when their valuer came round they agreed our top valuation with no quibble.

The property does not become "theirs" until you ( or in our case both of us die. Even then they (ER) only get their portion of the sale proceeds including the accrued interest, your estate gets the remainder.

They make their profit by the way the compound interest accrues very favourably to them.

Cheers, Martin

[Dave HalfordParticipant @davehalford22513]

Posted by Peter G. Shaw on 31/08/2019 10:32:10:

I think that what it boils down to is, do you want to risk spending up, and then throwing yourself onto "the council" bearing in mind that there are rules about asset deprivation.

Otherwise, I wish you well.

Peter G. Shaw

Now just where do you stand regarding asset deprivation and equity release?

What happens if you inconveniently live till 95 and all the money has gone, I dont see the company standing for negative equity.

Better to down size even if more inconvenient.

[John McNamaraParticipant @johnmcnamara74883]

Hi

I think the first consideration is the math on life expectancy, According to the UK census at a current age of 70 the average life expectancy is another 14.77 years as of the last assessment made a couple of years ago. This number is the average only, many people beat the average a few by decades.

ttps://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/datasets/nationallifetablesunitedkingdomreferencetables

I think any plans for the future need to take these statistics very carefully into account.

Being caught short a a vulnerable state of age when planning could have avoided it is a very unsatisfactory state of affairs.

Regards
John

[SamsarandaParticipant @samsaranda]

Equity release definitely not for me, I have three daughters, one of which constantly reminds me when I spend anything that it is “her” inheritance, the other two are quite happy for me and the wife to spend whatever we want. Fortunately I was a member of two very good final salary based pension schemes which give us a comfortable existence. I know that my daughters will be well looked after if they share the proceeds of the sale of the family home that of course is if we can avoid nursing home scenarios later on. I have always been both curious and suspicious of how Equity Release worked and how it was obviously profitable for corporates to be involved with.

Dave W

[pgk pgkParticipant @pgkpgk17461]

Personal circumstances and health states vary. If you're still up (!) for the wine and women then presumably still quite healthy. I second the need for independant advice on your circs but caution against so called independant financial advisers – they may be independant of specific banks etc but still look out for themselves.

I'd suggest you have a chat with your solicitor and then an accountant for their less self-interested opinions before speaking to a financial advisor. I've found both those quite approachable on such subjects and often have dealt with the fall-out. Indeed they often do such semi-formal chats foc.

When my Mother-in-law was looking at equity release I solved her need for money by buying a proportion of her house at market prices (OK so i was in a privileged position) but that also meant that when the inevitable happened we had less to inherit but also less to share with the other beneficiaries…it can get complicated.

edit: or you sell up, move to a carribean island, live as a beach bum and then buy some locally available happy termination when you've had enough (have you seen how much Dignitas charges!?)

pgk

Edited By pgk pgk on 31/08/2019 13:29:54

[NilochParticipant @niloch]

Consult Martyn Lewis & ' Which' magazine

[IanTParticipant @iant]

ER is not for me either I'm afraid. I have sons that will need something to help pay down the stupidly large mortgages they have taken on by the time they want to stop working.

Although it's a form of downsizing – I rather admired a Canadian Aunt of ours, who sold up and moved into a very nice high rise apartment which she rented. It was luxurious – Lifts, 24 hour Concierge, underground parking space (covered by CCTV from car to front door), swimmming pool – you name it. The other neighbours were all generally in the same age group and self-organised lot's of events – it was a self contained 'vertical' community! The rent was all inclusive and everything was maintained by her landlord. The capital sum from her home was invested in simple interest savings accounts and she'd worked out that it was more than enough to support her for about 20 years (she was in her early eighties at the time). When she eventually passed (90+) the estate was very simple to administer (no property to sell) and her children inherited the balance that was left.

It seems to be in contrast to people I've heard about over here in UK who downsize to a home "designed for older people" – but where it seems extremely hard for the family to sell up once their parent(s) pass on. They don't seem that cheap and there are often wacking great annual service charges too. I'm sure better solutions could be dreamt up for our aging population (of which I'm now a reluctant member) but frankly I've not seen anything that is quite as appealing (or as affordable) as that Toronto apartment – and of course, I would also have to downsize the workshop…

IanT

[Former MemberParticipant @formermember19781]

[This posting has been removed]

[Swarf, Mostly!Participant @swarfmostly]

Hi there, all,

A widowed and childless uncle of mine did the equity release thing several years ago. I never discussed it with him so I don't have much detail of his experience.

One bit I do remember, though, is that the organisation concerned imposed very stringent house maintenance requirements – obviously they don't want their investment to deteriorate through wear and tear. Still, complete exterior decoration annually seems a bit extreme!

A topic worth pursuing before signing up.

Best regards,

Swarf, Mostly!

[Dave HalfordParticipant @davehalford22513]

Posted by IanT on 31/08/2019 15:35:45:

It seems to be in contrast to people I've heard about over here in UK who downsize to a home "designed for older people" – but where it seems extremely hard for the family to sell up once their parent(s) pass on. They don't seem that cheap and there are often wacking great annual service charges too.

IanT

Seems they are building hundreds of those around here. The developer sells the flats with reasonable service charges then sells the lease of the whole building on to someone who wants a whole lot more.

Old people are now seen as

Job blocking.

A resource to be mined.

To stupid and greedy to notice the something for nothing con still works.

[Mike PooleParticipant @mikepoole82104]

Too many of us are spending the kids inheritance on care home fees. Leaving our assets to our children is a nice idea but it Is increasingly not happening. Spending your life’s savings and assets on your own care shouldn’t be wrong but it’s annoying that if you have no assets then care is covered by the state/council. You can’t take it with you but as you earned it then it should be your choice what you do with it but you can be sure the state will try and grab as much as they can.

Mike

[Mike PooleParticipant @mikepoole82104]

Double post

Edited By Mike Poole on 31/08/2019 19:42:58

[vintage engineerParticipant @vintageengineer]

Why do offspring think they are entitled to inheritance? My parents left me sod all and I don't feel obliged to leave any money to family dependents.

[colin wilkinsonParticipant @colinwilkinson75381]

Interesting comments. As I have already downsized to a smaller bungalow, had a workshop built, sorted out the property to suit me, I am ok for normal living. But that leaves me with a lot of money tied up in property that when I die will be sold for either charities or the governments benefit. Wikipedia explains the various equity release options, I will check out to find the one that will release the maximum amount and anything left can be willed to charity. Having seen inside care homes whilst my mother was suffering with dementia I know that once it starts you cannot have any comprehension of what life is like outside your own little world and are at the mercy of others for everything.

There are lots of reputable companies in the equity release market, obviously in it to make a profit, just a matter of sorting out the wheat from the chaff. Having had previous experience with financial advisors I think I can do as well if not better without paying their commission. Onwards and upwards. Colin

[Martin King 2Participant @martinking2]

Colin, You have a PM

Martin

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