Equity Release

[Old Boggy]

A dear friend of ours has asked me for my advice regarding the above. He is recently became a widower, is in his mid sixties and has been retired now for two years. He has no-one to inherit any of his estate. His house (fully paid for) I would imagine is worth in the region of £500K. He feels that he is still young enough to travel and enjoy the rest of his active life and is wondering whether to take equity out of his house to enable him to do this.

Not knowing anything about equity release, my advice to him so far is not to approach any equity release company before he has sought impartial advice from the likes of Citizen`s Advice or Age UK. 

Whilst it`s definitely not for me, I can fully understand where he`s coming from and perhaps in his position I would probably consider it.

I assume (rightly or wrongly) that if someone dies intestate or with no relatives, then the estate returns to the Crown, in which case, I would have thought that he`s got nothing to lose and much to gain.

Any advice gratefully received.

Many thanks,

OB

[Lloyd90]

Look into it very carefully and don’t approach the companies for info, there’s a lot of sharks etc out there. 
 

As he has no kids or anyone to leave his estate to then spending and enjoying the cash is a perfectly reasonable thing to do so can see the logic in it. 
 

Some of the bigger (and regulated) companies are offering a “Life time mortgage” which is sort of equity release, 

Some info 

 

https://www.legalandgeneral.com/retirement/lifetime-mortgages/

[steve_b_wales]

Just now, Old Boggy said:

A dear friend of ours has asked me for my advice regarding the above. He is recently became a widower, is in his mid sixties and has been retired now for two years. He has no-one to inherit any of his estate. His house (fully paid for) I would imagine is worth in the region of £500K. He feels that he is still young enough to travel and enjoy the rest of his active life and is wondering whether to take equity out of his house to enable him to do this.

Not knowing anything about equity release, my advice to him so far is not to approach any equity release company before he has sought impartial advice from the likes of Citizen`s Advice or Age UK. 

Whilst it`s definitely not for me, I can fully understand where he`s coming from and perhaps in his position I would probably consider it.

I assume (rightly or wrongly) that if someone dies intestate or with no relatives, then the estate returns to the Crown, in which case, I would have thought that he`s got nothing to lose and much to gain.

Any advice gratefully received.

Many thanks,

OB

First of all, I would strongly advise your friend to make a will. He can then leave the value of his estate/savings etc to whoever he wants (charity etc) and to stop the government getting their hands on it. We had sound advice from AVIVA. If he does go ahead with an equity release, then after his death, the company get's their 'share' and the rest goes to who he has chosen. Personally, I would ask myself, why not enjoy the rest of my life travelling etc, especially knowing that the government will get their greedy hands on the value of his estate etc.

[Rim Fire]

i myself was contemplating looking into this i have brothers and sisters so has the wife but i won't lose any sleep  thinking im not leaving them anything 

i was the one with my wife who worked for it so why should others benefit from it different if you got children 

[Old Boggy]

Many thanks for the advice, particularly making a will and the link to the Lifetime Mortgage.

I`m not sure whether he has made a will so far, but will pass all the comments onto my pal.

OB

[steve_b_wales]

6 minutes ago, Rim Fire said:

i myself was contemplating looking into this i have brothers and sisters so has the wife but i won't lose any sleep  thinking im not leaving them anything 

i was the one with my wife who worked for it so why should others benefit from it different if you got children 

My wife an I both have a daughter from previous marriages. We made a will as soon as we were married, basically leaving 'all that we've got' split equally between them both. Should one of them pass away before us, then their 'share' goes to their children. Our children are financially okay, so far, and we stand to receive a fair amount should we chose to go ahead with the equity release. Our daughters would then get the remainder of the sale of our house once the equity release company get their share, including the interest. We've calculated that our daughters would still get a fair amount between them.

[Rim Fire]

36 minutes ago, steve_b_wales said:

My wife an I both have a daughter from previous marriages. We made a will as soon as we were married, basically leaving 'all that we've got' split equally between them both. Should one of them pass away before us, then their 'share' goes to their children. Our children are financially okay, so far, and we stand to receive a fair amount should we chose to go ahead with the equity release. Our daughters would then get the remainder of the sale of our house once the equity release company get their share, including the interest. We've calculated that our daughters would still get a fair amount between them.

👍 

[Vince Green]

Equity release is a posh name for a high interest second mortgage.

If he has nobody to leave his money to then it makes perfect sense. He should get proper advice though

[Rim Fire]

1 hour ago, Vince Green said:

Equity release is a posh name for a high interest second mortgage.

If he has nobody to leave his money to then it makes perfect sense. He should get proper advice though

That is the right answer  proper advice 

Edited October 30, 2023 by Rim Fire

[Dougy]

1 hour ago, Vince Green said:

Equity release is a posh name for a high interest second mortgage.

If he has nobody to leave his money to then it makes perfect sense. He should get proper advice though

Exactly this. Different name for a loan based on the cost of your property. Interest rate is astronomical. 

Looked into this.

No family and no friends to leave anything to and taken advice from financial advisors was,  as a last resort and leave as long as you can if you do decide to do it. 

When I've gone, 

If anyone wants my primers and powder stash join the queue. 

[Vince Green]

1 hour ago, Dougy said:

 

When I've gone, 

If anyone wants my primers and powder stash join the queue. 

The way prices of powder and primers are going (if you can get them) your stash may well be worth a sizeable amount of money 

[Weihrauch17]

He would be better downsizing to release equity IMHO.

[button]

1 hour ago, Weihrauch17 said:

He would be better downsizing to release equity IMHO.

This

[oowee]

1 hour ago, Weihrauch17 said:

He would be better downsizing to release equity IMHO.

I must confess that I don't know how the numbers work. A chap here in the village sold his house and bought a lodge. The lodge cost him £250k and can be lived in year round leaving him the cash from the house sale. The lodge is small at around 800ft2 but smart enough and in a lovely part of Dorset. 

[Windswept]

There may be other benefits of downsizing, such as reduced council tax, insurance etc but the many older people don't want to move.

This might be a helpful guide for your friend: https://www.which.co.uk/money/pensions-and-retirement/you-re-retired/what-is-equity-release-aWHbh3k7xmWk

Edited October 30, 2023 by Windswept

[Bigbob]

My aunt did this apparently and when she died her family where rubbing there hands thinking about the money that would be coming there way when the house was sold . it was funny seeing the company move in and claim the house 

[nobbyathome]

One of my friends downsized and went to live in an over 65 macartney and stone retirement village in Kent the flat cost him 275k  and the monthly fees are quite cheap giving him loads of money to spend how he wants for the rest of his life old boggy get your friend to have a look at some of there flats they really are good you can just happily live on your own or be as social as you want I for one will be doing that in another 10 years time 

Edited October 30, 2023 by nobbyathome
Change of price

[Old Boggy]

Downsizing does seem a good way to go and as said some of those lodges are really nice. Two other pals have done just that and are more than happy with plenty of cash in the bank to spend as they wish.

I will advise my pal accordingly and introduce him to one of the ones who have downsized for him to get first hand knowledge.

Many thanks for all the replies.

OB

[Lloyd90]

17 hours ago, Weihrauch17 said:

He would be better downsizing to release equity IMHO.

I thought about that but if you live in a nice house and don’t want to move what’s the point? You may end up moving into a smaller home that you don’t like as much just so you don’t rack up interest that you won’t pay yourself anyway. (You won’t worry about it when you’re brown bread). 
 

My only question is, what happens if the equity release interest clocks up more than the house is worth? 
I assume they sign to say they can’t have the house until you’re dead and buried and therefore work it out that you’d have enough equity for your life expectancy for them to see you out. 
 

Just be careful that if you need a care home the council won’t give you any choice (they’d put you in the cheapest home available) Vs if you had a lot of equity / cash you may have more choice if self funding. 

10 hours ago, nobbyathome said:

One of my friends downsized and went to live in an over 65 macartney and stone retirement village in Kent the flat cost him 275k  and the monthly fees are quite cheap giving him loads of money to spend how he wants for the rest of his life old boggy get your friend to have a look at some of there flats they really are good you can just happily live on your own or be as social as you want I for one will be doing that in another 10 years time 

Those retirement villages where people get lots of social interaction and exercise can be brilliant. 
 

The interaction and exercise really does keep people going. 
 

Hard to find a decent one though. 

[Rim Fire]

1 hour ago, Lloyd90 said:

I thought about that but if you live in a nice house and don’t want to move what’s the point? You may end up moving into a smaller home that you don’t like as much

This is what's stopped me down sizing where i live i got the mountain the Forest tree  i just couldn't live where you look out the window and just see other houses as a young boy i would grab my shotgun a few cartridges and spend all day on the mountain you could back then   

[Cranfield]

In his position, I would consider selling the property and then renting something smaller, like an apartment.
He can then do what he wants with the equity, having made provision for lease costs.

Equity release, or life time mortgages are designed to make someone a lot of money and it ain't the owner.

[TOPGUN749]

If it was me I would sell,and buy much cheaper place to live,depending on area this might be £150,000 or less, alternatively sell and simply rent somewhere for the rest of his life,yes rent is expensive but no one to inherit anything anyway so the lot can be spent.£300,000 invested would bring in almost £15,000 a year income after tax.

Edited October 31, 2023 by TOPGUN749

[oowee]

It's an interesting dilemma. Down size and maybe end up in an area you don't know or a property you are less happy with. Do nothing and have a lower quality of life. Equity release and enjoy some benefits from the assets that you have accumulated. It matters not a jot that someone somewhere will make money from equity release what matters is that you make the most of the life you have in the way that you choose. 

Making these life changing decisions is the hard part. Particularly given the social and human investment that you are likely to have made in the property that you currently own. It's not easy to leave friends, neighbours, a locality and potentially start again by down sizing. Equity release allows you to  stay with what you know and at the same time freeing up some cash for those extras. 

[marsh man]

Depending on the the size of the house the person in question live in would be a deciding factor for me , we moved out of a three bedroom house into a two bedroom bungalow , both of us are over the mid 70s and now my wife is getting less mobile it have been a godsend for her not to keep going up and down the stairs and although I could go up and down I am very glad I don't have to .

We had a bloke on the estate who used to help me out with a lot of the brickwork that needed to be done , he and his wife lived in a fair size house near Bungay which was about 15 miles away from his workplace , he was in his mid 50s at the time when he decided to sell up and he moved into one of the estates rented cottages , he told me it was the best days work he ever done , he had a nice lot of money in the bank and lived in a lovely cottage that was on a slight hill ( well hill to us ) that overlooked the marshes and in full view of some brilliant sunsets , as he was alright for money he cut down a lot on his workload and had a day or two off when he wanted , sadly his health deteriorated and he passed away just a few weeks before retiring , his wife's health was not much better and she got M E and the last time I saw her she was in a wheelchair , by now she might have also passed away , still he enjoyed the last few years of his life and whatever worries he had , money wasn't one of them .

[ph5172]

I have looked into this on and off. 
 

if he is really really attached to his property for some reason then he needs to take some independent advice. 
 

if he isn’t and is going to spend his cash travelling anyway then why not downsize and blow the lot on travel. 
 

when the time comes he will have a small property he can leave to whoever sell it to buy a few weeks in decent care or let the council take it to pay for his care. 
 

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