[Finance] Equity release.

[Live by the sea]

You don't know what you're talking about!

Have you worked out the compound interest rates on an average property in Brighton & Hove of say £500,000 over 20 years !

Equity release is a terrible idea for most people . IFA’s make money out of selling it to you . Use your own common sense and do the maths , don’t believe a glorified salesperson ..

 

[WATFORD zero]

Have you worked out the compound interest rates on an average property in Brighton & Hove of say £500,000 over 20 years !

Equity release is a terrible idea for most people . IFA’s make money out of selling it to you . Use your own common sense and do the maths , don’t believe a glorified salesperson .

I think it's safe to say that in your desperation to talk about money, you haven't read a single word of the original post

And, if you're trying to be American on this account, it's Math

 

[kevo]

I know it doesn't suit everyone. I'm not remotely interested myself. However, my best mate is. He's asked me for recommendations. He's 67 and still works part time. He's never earned a decent salary, and never had any cash, because on the rare occasion his wife got a job, she couldn't keep it for more than a couple of weeks. He's mortgage and debt free, owns his own flat and has no dependents. No relative to inherit his property upon his demise.
He wants to go to some observatory in Spain, and do some great things whilst he's still got his health and faculties. I think it's a great option for him, but don't want to recommend him to a bunch of shysters. Any sensible recommendations, please. He's left me some 'Key' brochures to look at, but I'm out of my depth here.

It's a great idea, except.....

The rates are absolutely horrendous atm (thanks Truss and Kwarteng). It depends on the percentage of the value he is after, but if it's, say, as a high as a third, then with the cumulative insterest he is likely to lose all of his equity within about 10-15 years. He would still be able to live in his property, but would leave absolutely zilch to anyone. If he's at all concerned about leaving something behind for friends or relatives, it's a big no-no.

The other thing to bear in mind is that there are some restrictions when it comes to downsizing, moving home etc.

If this had been two years ago, when rates were as low as 2-3% and house prices looked stable, I would have totally recommended it, but now they are more like 7% or over and house prices are falling. So it's a question of whether he would feel comfortable at some point losing all his equity.

There might be an argument for waiting a little while, as it is forecast that EQ rates will drop a bit over the next year or so, although probably not by a huge amount.

 

[dejavuatbtn]

My only experience was my step dad who owned his bedsit. He wanted £10k to do up his bathroom and kitchen but was persuaded by the adviser to take the maximum of £30k which ended up being spunked. By the time he had to give it up and go into care the bedsit was worth £180k and the mortgage £90k, the difference paying for about 2 years in a care home before the state had to pick up the bill. I think the interest rate was 5.99% compound.
Basically the company made a lot of money at the expense of the taxpayer.

 

[sparkie]

A mortgage or 2nd charge would involve monthly repayments - unlike an equity release mortgage. The OP stated that the person in question has 'never earned a decent salary'. So how would having to make monthly repayments on a loan help him?

As stated it's just what I would do - I'd avoid Equity Release, get a small secured loan from Shawbrook Bank over the maximum allowed term ( until age 85. )

Each to their own. I'm not telling the OAP what to do.

 

[dazzer6666]

Professional advice should be avoid equity release schemes !

….it will be if they’re not appropriate for the individual.

 

[Live by the sea]

I think it's safe to say that in your desperation to talk about money, you haven't read a single word of the original post

And, if you're trying to be American on this account, it's Math

I’ve moved more than 25 years ago !

 

[WATFORD zero]

I will repeat one more time for the seriously hard of understanding

I know it doesn't suit everyone. I'm not remotely interested myself. However, my best mate is. He's asked me for recommendations. He's 67 and still works part time. He's never earned a decent salary, and never had any cash, because on the rare occasion his wife got a job, she couldn't keep it for more than a couple of weeks. He's mortgage and debt free, owns his own flat and has no dependents. No relative to inherit his property upon his demise.
He wants to go to some observatory in Spain, and do some great things whilst he's still got his health and faculties. I think it's a great option for him, but don't want to recommend him to a bunch of shysters. Any sensible recommendations, please. He's left me some 'Key' brochures to look at, but I'm out of my depth here.

At no point have I said he should do this, but I have said it is seriously worth him investigating

 

[Deleted member 37369]

our old neighbour did this in their 70's - not entirely sure how much, think only 25k or so spent on cruises etc
lived to 99 - when house was sold for best part of 300k was nothing left for family to inherit
compound interest adds up over time

Any scheme in the 1970s were very very different compared to equity release products today.

 

[Deleted member 37369]

Have you worked out the compound interest rates on an average property in Brighton & Hove of say £500,000 over 20 years !

Equity release is a terrible idea for most people . IFA’s make money out of selling it to you . Use your own common sense and do the maths , don’t believe a glorified salesperson ..

Glorified salesperson ...

Don't bother responding further with your unqualified nonsense ... I won't reply again!

 

[Deleted member 37369]

It's a great idea, except.....

The rates are absolutely horrendous atm (thanks Truss and Kwarteng). It depends on the percentage of the value he is after, but if it's, say, as a high as a third, then with the cumulative insterest he is likely to lose all of his equity within about 10-15 years. He would still be able to live in his property, but would leave absolutely zilch to anyone. If he's at all concerned about leaving something behind for friends or relatives, it's a big no-no.

The other thing to bear in mind is that there are some restrictions when it comes to downsizing, moving home etc.

If this had been two years ago, when rates were as low as 2-3% and house prices looked stable, I would have totally recommended it, but now they are more like 7% or over and house prices are falling. So it's a question of whether he would feel comfortable at some point losing all his equity.

There might be an argument for waiting a little while, as it is forecast that EQ rates will drop a bit over the next year or so, although probably not by a huge amount.

OP stated ... "No relative to inherit his property upon his demise"

 

[ac gull]

when the neighbour was in their 70's - we moved here when she was 96 about 8 years ago

she took all the loans out in the 1990's and spent the lot - didn't tell family what had done - they thought she was living off pension of second husband re all the holidays etc

only when she turned 98 and went into a home did family find out, having spent 15 years on daily visits so she could carry on living in own home

OP may well have no kids but there may be some friends and extended family that get involved in helping care for them in 15 or 20 years time and may wish he had something left to leave them

Plus is a whole separate topic is to whether health care will be free to all in 20 years time

 

[kevo]

OP stated ... "No relative to inherit his property upon his demise"

I'm not talking about dependents, I'm talking anyone he might want to leave something behind for, even charities - rather than have some property company hoover up all his money. And it's not the whole property is it? It's anything at all.

 

[Live by the sea]

Glorified salesperson ...

Don't bother responding further with your unqualified nonsense ... I won't reply again!

If you sell someone a product be it financial or physical you are a type of salesperson . It may be regulated & you need to pass some tests but it’s still selling . Yes ?