[Finance] Equity release

[dazzer6666]

Not for me, however slightly different i keep getting asked due to my age if i want to take a lump sum tax free from my pensions, any thoughts on this? A couple of work mates have done this and brought static caravans as an investment.

Get professional advice, it’s very complicated and highly dependent on individual circumstances. Most decent IFAs will give you an hour of free consultation initially………

 

[studio150]

People of a certain age will remember negative equity.

No interest in releasing equity myself but just wonder what the position is when you die and the value of the house is now worth less than the amount due under the equity release plus interest does the debt pass to your next of kin or is it written off.

Not an issue in the recent past but who knows what the future holds.

 

[Blue Valkyrie]

People of a certain age will remember negative equity.

No interest in releasing equity myself but just wonder what the position is when you die and the value of the house is now worth less than the amount due under the equity release plus interest does the debt pass to your next of kin or is it written off.

Not an issue in the recent past but who knows what the future holds.

Once all your assets are sold any outstanding debt is written off.

 

[timbha]

People of a certain age will remember negative equity.

No interest in releasing equity myself but just wonder what the position is when you die and the value of the house is now worth less than the amount due under the equity release plus interest does the debt pass to your next of kin or is it written off.

Not an issue in the recent past but who knows what the future holds.

Pretty sure this can’t happen. When the remaining spouse dies there can be no negative equity. The value of the property pays the debt and if it’s insufficient the lender takes the hit.

It’s also compulsory to take professional advice.

 

[Charlies Shinpad]

My mum and Dad went to a seminar years back and were told there is no point saving for a rainy day as it's drizzling all the time now.
They told me and my brother and sister they were going to sell their house and rent somewhere and spend the proceeds.
That's what they done and had a great time.
So enjoy before you are dribbling and wetting your pants.

Sent from my CPH2195 using Tapatalk

 

[schmunk]

Be aware of the tax implications. You might find you are paying 40% tax on it if it is classed as income in year.

Be assured, from a Tax Advisor, this would not be taxed as income nor, assuming this is an only/main residence we're talking about, capital gains tax.

 

[WATFORD zero]

Once all your assets are sold any outstanding debt is written off.

Pretty sure this can’t happen. When the remaining spouse dies there can be no negative equity. The value of the property pays the debt and if it’s insufficient the lender takes the hit.

It’s also compulsory to take professional advice.

I don't know for sure, but if you look at the link I posted on the first page, stories on the Martin Lewis website suggest otherwise.

 

[Neville's Breakfast]

My father in law did this then died shortly afterwards thereby massively diminishing the value of his estate to his heirs. Basically the parasite equity release company got themselves a free house.

 

[beorhthelm]

Be assured, from a Tax Advisor, this would not be taxed as income nor, assuming this is an only/main residence we're talking about, capital gains tax.

i do wonder about this. is it correct one can pretty much receive any amount as a gift from anyone tax free? only earnt money counts as income, asset sales count as CGT?

 

[Cheshire Cat]

i do wonder about this. is it correct one can pretty much receive any amount as a gift from anyone tax free? only earnt money counts as income, asset sales count as CGT?

I think there is a £3000 annual limit on gifts, before something kicks in. Can't remember what though.

Also if they have to go into social care it could be regarded as a deliberate deprivation of assets.

 

[happypig]

I'm more concerned about what impact taking £100k of equity release off a £230k odd house will have should they need care or similar going forward.

As I understand it, you can do whatever you like with your assets but only before a care need is identified; we tried to get my M-i-L to sign her house over to her children (by way of a trust) but she was adamant that she wouldn't ever need care (she did) and that children weren't to be trusted and would sell it off and evict her.

 

[kevo]

But if you don't have kids, and aren't bothered about leaving the property to anyone? . . .

This is the crux. The interest can accrue at a frightening rate - but who cares if you're not bothered about leaving an inheritance? You can't take it with you, etc....

If you do want to leave something behind for others but are still tempted by the dosh, you could just sell off a small percentage. The value of your property will almost certainly increase over the years, meaning you should still be able to leave a substantial sum.

 

[Titanic]

My father in law did this then died shortly afterwards thereby massively diminishing the value of his estate to his heirs. Basically the parasite equity release company got themselves a free house.

I don't understand that. You take out say £100k from the value of the property as an equity release, and then you die. Your beneficiaries have the value of the house - the £100k equity release and some fees, and the £100k in the bank.

 

[phoenix]

Pretty sure this can’t happen. When the remaining spouse dies there can be no negative equity. The value of the property pays the debt and if it’s insufficient the lender takes the hit.

It’s also compulsory to take professional advice.

There will be no negative equity most of the companies guarentee this. But to cover themselves they will only offer just over a 3rd of the property value.So its extremmly unlikely this would ever occur.

 

[timbha]

I don't understand that. You take out say £100k from the value of the property as an equity release, and then you die. Your beneficiaries have the value of the house - the £100k equity release and some fees, and the £100k in the bank.

That’s what I was thinking. The ER coy wants you to live long so they can rack up the interest.

 

[timbha]

There will be no negative equity most of the companies guarentee this. But to cover themselves they will only offer just over a 3rd of the property value.So its extremmly unlikely this would ever occur.

I think they’ll lend up to 50% of the current value of the property, giving the ER coy cover for an unexpected and sustained fall in the property’s value.

 

[theboybilly]

Me and my other half were talking about this (and the current financial situation) the other day. We both agreed that if things really go that bad (we're both retired) that we could downsize and even up sticks to somewhere cheaper than the South East. Her son lives in Lincolnshire and loves it, my family come from Durham so options there, But I would never ever consider Equity Release. It's something I just know I would come to regret. That said I don't think that for us it will ever come to that.

 

[jessiejames]

if you’ve been contacted out of the blue avoid them like the plague. Too many stories of people being relived if their entire pot by scam merchants, and also people ending up with a large tax bill.

not being rude, but i wouldn’t can’t imaging a static caravan being an appreciating investment, but i maybe quite wrong.

Not into the caravan idear either, one couple use it 3 weeks a year, then just rent it out the rest of the time, say.

 

[Weststander]

Not for me, however slightly different i keep getting asked due to my age if i want to take a lump sum tax free from my pensions, any thoughts on this? A couple of work mates have done this and brought static caravans as an investment.

Is it businesses/advertisers doing the asking? Avoid like the plague.

You only need to deal with the pension company or current IFA to take the 25%. No need for a JCL to get their grubby paws on some of the money.

Be aware if you still intend building your pension fund through contributions, that taking the lump sum heavily restricts future contributions.

 

[Weststander]

i do wonder about this. is it correct one can pretty much receive any amount as a gift from anyone tax free? only earnt money counts as income, asset sales count as CGT?

Isn’t the tax implication only on the person gifting, whether it be IHT, CGT or for Social Care funding?

The exception being interest earned on an asset gifted.