Equity Release advice

bobblehat

Registered User
Aug 16, 2015
24
0
Hello all!

Mum's in a care home now and her bungalow is rented out. To continue to pay for the care we need to either sell the bungalow, do some equity release on the bungalow, or rob a bank.

Apparently the police say robbing banks is not good (spoil sports) so we're going for equity release. We're just starting to look into it now so I thought I'd ask here if anyone has any good/bad website suggestions or general thoughts before we get into the nitty gritty of it.

Is there, perhaps a bank/finance company we should avoid? Or one that you'd recommend?

Thanks!

PS I've had some really good advice and read some great stuff on this forum in the past; what a marvellous resource it is! I did a search for equity release here and found some info which was useful but anything more is welcome!
 

Jessbow

Registered User
Mar 1, 2013
5,680
0
Midlands
What is the advantage of equity release over selling?
'd favour selling as I guess equity release could become quite messy when it comes to financial assessment and alike.

If renting it out doesn't realise enough to cover fees, I think i'd sell
 

jugglingmum

Registered User
Jan 5, 2014
7,085
0
Chester
If you use equity release, this has to be repaid at some stage, via sale of the bungalow presumably, and presumably it would be redeemable on your mother's death.

As I've alway understood it Equity release works out relatively expensive.

I presume the logic is that the rental income stream is coming in, whilst the bungalow is owned?

I too think it would be better to sell and invest the monies realised.
 

bobblehat

Registered User
Aug 16, 2015
24
0
Thanks for those replies.

We just figured the rental income would cover the equity release interest (and then some more) while the house price went up. More, perhaps, than any interest on the money we'd get if we sold it.

I guess we need to crunch the numbers a little more to see if that's really the case!
 

nitram

Registered User
Apr 6, 2011
30,085
0
Bury
The equity release blurb is 'use the value of your house to provide extra cash to live on and still live in the house'

She does not need the house to live in and does have need of ready cash to fund her care.

My first thought is to sell the bungalow.
 

lemonjuice

Registered User
Jun 15, 2016
1,534
0
England
From my , admittedly small, knowledge, any 'equity release' scheme requires repayment when someone goes into residential care anyway. Plus to get the equity release they require their name to go on the deeds, so their 'investment' is guaranteed to pay out and by the time you've paid solicitors to set it upand then later at sale may well not be worth it.

I'd also suggest selling it may well work out better and less stressful. I did let out my mother's property but this comes with its own set of worries and problems of mainteance / replacement of certain things between tenants. Rentals never look after property as well as if they own it.
 

Beate

Registered User
May 21, 2014
12,179
0
London
I object! I'm a very good tenant and have lived in the same property for over 11 years now! The fact it looks quite lived in now is due to the Landlord always taking ages with maintenance and repairs, and any cosmetic improvements (like painting walls now and then or a new kitchen floor) are considered not necessary! Owning property comes with responsibilities and if they are too time or money consuming, it's probably really better just to sell.
 

DianeW

Registered User
Sep 10, 2013
859
0
Lytham St Annes
I too rent my apartment and treat it just as well as if I did own it.

However I work in the housing field and accept that not all tenants look after a property.

I think I probably would sell also.
 

Kevinl

Registered User
Aug 24, 2013
6,064
0
Salford
Why not just ask the Local Authority if they will Deferred Payment Agreement (DPA) you can do that if the money is going in care fees and as long as the LA are happy with the rental contract.
The LA can only charge interest at a set rate which I think is about 2.5% at the moment, it has to be cheaper than equity release.
The only person I know that did equity release (well his dad did it) and when his dad died the amount that his estate owed them was phenomenal way more than any possible increase in house's increase in value since he took it out. It was something like he release £20k and 5 years later owed them £35k as I remember.
There are plenty of people out there predicting stagnating or declining house prices, if the house doesn't go up in value by more than the interest on the equity release and the interest rate which could be over 5%.
I'd see if the LA would do a DPA on it, it has to be a cheaper option.
K
 

Pickles53

Registered User
Feb 25, 2014
2,474
0
Radcliffe on Trent
The other problem with equity release is that if at some point you change your mind, there is an early repayment fee too. A relative of my husband’s did equity release and about two years ago decided she wanted to get out of the arrangement early (to move somewhere smaller). She was horrified by the total amount she would have to pay and sadly she’s now stuck, as the amount she would have left to buy a smaller place wouldn’t be enough. Of course every year the amount she owes gets bigger.

It really only makes sense to me if you need to release cash while you’re still living in the house, otherwise an outright sale gives you much more flexibility.

I’m sure you will make sure that you have very detailed figures about the total cost of the loan over the expected time period before you sign on the dotted line. You’re going to be paying an awful lot of interest.
 

nita

Registered User
Dec 30, 2011
2,651
0
Essex
I definitely don't think equity release is an option. It has to be repaid when the owner either goes into care or dies. So it is out of the equation and wouldn't be offered in the first place.
 

lacey1962

Registered User
Jan 9, 2016
42
0
Crawley
I have decided to sell my mums house and buy a flat to rent out with part of the money. The rest can be used for her care fees and hopefully this will keep her fully funded for a few years with the rent from the flat, her pension and attendance allowance .
 

la lucia

Registered User
Jul 3, 2011
592
0
Hello all!

Mum's in a care home now and her bungalow is rented out. To continue to pay for the care we need to either sell the bungalow, do some equity release on the bungalow, or rob a bank.

Apparently the police say robbing banks is not good (spoil sports) so we're going for equity release. We're just starting to look into it now so I thought I'd ask here if anyone has any good/bad website suggestions or general thoughts before we get into the nitty gritty of it.

Is there, perhaps a bank/finance company we should avoid? Or one that you'd recommend?

Thanks!

PS I've had some really good advice and read some great stuff on this forum in the past; what a marvellous resource it is! I did a search for equity release here and found some info which was useful but anything more is welcome!
You need to think of Equity Release as a 'reverse mortgage' thus unlike a normal mortgage the interest on the amount that is borrowed INCREASES instead of diminishing. You also cannot bank on house prices rising. We're actually in an economic situation that is highly unstable and exhibiting pre-crash symptoms. This is likely to get worse all things considered.

As others have suggested, the local authorities can offer deferred payments which are likely to be more suitable. Whatever you do you will need to cost out each option and base things on 'worse case' not 'best case'.
 

bobblehat

Registered User
Aug 16, 2015
24
0
Thank you all so much for your input here. It's interesting: to begin with I thought the equity release was the way to go but after all your comments, and a bit of a chat with my accountant, it seems selling it is the way to go.

Hmmm... perhaps I should rob the bank after all.