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Equity release/Lifetime mortgage

2K views 18 replies 13 participants last post by  ParadiseRoad 
#1 ·
For a while now I have been thinking about releasing some equity from my property. As I understand it, there are two basic schemes; one is where you recieve a sum of money from a bank/company, they own your house and you rent it off them (I know 'never say never' but...that's not going to happen with me..) and the other scheme is as above but the deeds are still in your name and you repay the money after you die by the company selling your house. Thats the one, if any, I'm interested in.
I'm just wondering if anyone on here has either entered into a scheme like the last one or knows somone who has and if there are there any pitfalls or hidden nastiness I should be aware of. I realise this is a senstive subject so if you would rather PM me, or not even talk about it, I'll understand.
Just a little bit of background; I have no wife/dependant/children or relatives to leave my estate to, I own my own property and am 55 and am a Leo with a GSOH...sorry, disregard the last two...wrong site.
Thanks. Billy
 
#2 ·
Hi Billy, My folks looked into this earlier this year it was my dad's kinda main plan for a 'comfortable' retirement. It all looked very good, my dad is a clever well experienced guy and read through it carefully. However when it came to paperwork time and the usual small print it became obvious not one but a few of the 'advisors' had been more than wrong about the amount of interest you actually pay back. The first year was around 4x expected, 2nd year 8x, 3rd 16x etc etc, basically it doubled itself every year. If they had taken the plan they wanted which was selling around 50% value of their house within four years the complete value of the house would have been exceeded meaning the family owe them money. They didn't go ahead after much much research, i'd advise you to be very very careful.
 
#3 ·
Sell the house go on long holidays trips around world,buy street rods enjoy life after cash gone go on benefits and get rent etc paid,they cannot take the memory's away ,you could get run over tomorrow ,or as happened to my dad here 1 day gone the next when he had an anurisum .
 
#6 ·
Thanks for the feedback so far folks. The remortgage idea would probably be a good one but at the moment I'm not working so won't be able to do that. The 'selling it all' idea has been suggested to me before but, I'm too much of a wimp to do that..had I been 30 years younger and not so set in my ways, I would have probably considered it. I take on board the 'run over by a bus' scenario though!
Thanks for sharing your folks experience with me BD; much appreciated.
 
#8 ·
When my grandfather died 3 years ago my grandmother took this option with the bank. She didn't have an awful lot of money out of the value of the house - about £25k if I recall correctly.
The terms of the contract were essentially that she could stay in the house until she died (18 months later incidentally) and that when this happened the property was to be sold and the bank repaid their original stake plus a percentage of interest on top for however long that term was up to a maximum of 7 years where their entitlement would double.
So, if she had survived my grandfather by 10 years the most the bank would have been repaid would have been £50k. Sadly she wasn't with us very long.

I believe the bank was Natwest?

-JC.
 
#9 ·
Thanks for the above replies.
I'm now at a point in my life where either Equity Release or selling my land with outline planning permission is becoming a bit more of a reality. Regarding the former; has anyone had any dealings with the 'Age Partnership' company regarding Equity Release? Could do with some extra reviews. (Of course, if you can't or don't want to talk about it to me or would rather PM me, I understand) I have a family friend who has recently released some equity with said company and I'm speaking to her next week but, the more feedback the merrier.
Thanks.

Billy.
 
#10 ·
Hi Billy, if you've got land for sale with outline planning permission, I'd get an auction company to value it. You'd get a sale to completion within 28 days of the auction finishing. i.e, you'd have the money in the bank that quickly. Alternatively, why not downsize? A modest 2 bedroom flat and a garage en-bloc?
 
#12 · (Edited)
A mate of mine looked into equity release and one of the clauses said the house must be in good condition (his needed work) and another said the relatively small amount of money released could only be used for home improvements, so a bit of a nonsense really.

I would go with Jonny99, but I'd take the money and run to the sun, get a decent motor home, while in UK go to every car show and fun event you can find, free parking most weekends and plenty of company. Join the Caravan Club and stay on cheap CL sites during the week, in nice countryside.

We lived in a self build van for 18 months saving money before we bought our house and it was the best time ever, went all over Europe too.

Bernard
 
#13 ·
Hi Billy,

I used to work for the Citizens Advice Bureau and sat in on a number of forums relating to equity release schemes when they first started to appear, and unfortunately dealt with a number of horror stories along the way.

Age Concern, or Age Uk as it is now known, were at the forefront of getting the industry regulated as I remember, and it was a bit of a free for all for unscrupulous lenders in the beginning.

There are a number of different ways to release money from your property but some have ages restriction that apply to them and will apply to you.

Have a look on the Age UK website; Age UK | The UK's largest charity working with older people go to 'Money Matters' then hit on 'Income and Tax' and scroll down to 'Equity Release'. Plenty of useful information there mate. Or you could give them a call on 0800 169 2081.

Cheers.
 
#15 ·
Hi Billy, it's nearly 9 years since I worked as a mortgage adviser but back then the selling of equity release or lifetime mortgages wasn't regulated and there were some very expensive and dodgy schemes about. I refused to have anything to do with them on moral grounds, even though there was a lot of money to be made selling them......probably why I'm not working in the industry any more :D things may well have changed now but be very very careful before signing up for anything and pay for advice, don't rely on an adviser that works on commission only, their advice can be biased toward the company that pays them the most!
 
#16 ·
Nice to see someone with morals, there are far too many who'll do anything for a buck. The knid of scum for example who will happily ticket an 80 year old lady for being 5 minutes too long in a parking bay. It's discretionary, but I know the kind of turds the job attracts......
 
#18 ·
Firstly, thanks very much for the replies. Much appreciated. Re Planning Permission; I should have said I have land (enough for 2 dwellings) but, I don't have outline planning permission but if I were to sell it, I'd get, or at least, try to get, planning permission. After taking on board the replies and re thinking my situation, I realise that, were I to move, I'd need pretty much what I have now (ie; a view with fields and trees when I open my curtains, a neighbour that, believe me, is the worlds best and enough land for a few cars and, at the moment, 13 sheds) so, the only thing that would make things more comfortable is a healthier bank balance (hence my Equity release question) One of the problems is, at least, round these parts, is finding a place like that or similar, that doesn't need an astronomical amount of money to buy it. When I first wrote the thread, I was unemployed but, thankfully I'm now working but, even though for me, it's an almost perfect job, the wages aren't great (can't have everything, can you. Haha) hence my initial question.
Regarding quiz shows; I'm not sure if you know my track record regarding TV quiz shows but, if you did you'd know it probably cost me more money to get to the auditions etc than I won when I actually got on them! Another re think required there then. Haha. :sniff:
As I said before, thanks very much for your input.
 
#19 ·
Billy, its only my opinion but you may have another option, its something I have quite wide experience of,
Firstly pay for a consultation with your local planning office, it used to be free and you got a very sketchy opinion now you pay and seem to get proper advice, my LPD charge £180 if I remember correctly. Assuming they provisionally might accept two dwellings find a local architect to put together some basic drawings, they need only be acceptable for planning permission you do not need nothing more at this stage.
Yes you will have some fees and application costs but its money in the bank if its accepted.
Next is up to you, a simple deal is to approach a good local builder, you retain title on the land and he provides the dwellings, services and all associated professional fees, all you is a need a simple partnership contract with the builder through a solicitor, its better if you find someone you can work with obviously.
You agree the profit carve up from the outset, it may be that you keep one house and sell the other avoiding any CGT.
Its just a thought but I have done similar schemes myself on many occasions, its quite an attractive proposition to a lot of builders. Mike
 
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