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Equity Release..

kdoug007
Grafter
Posts: 510
Registered: 17-05-2012

Equity Release..

ok its not  the  ideal  route  to go  down ( 55yrs+) the older  one ,is   the more  one receives..
,,,  However  if  one has a  mortgage
 and  have  no  hope of  ever   , repaying  it..  and then a  possible  re-possesion
 for  example on interest  only...
 it  could  be a  saviour!!
 just to note,,   if  you  do take that  route  DONT  except  the  first offer..
 some  are  offering  a  lot  lot!! more  than  others...
 yes  we  are  talking about thousands!!
[Moderator's note by Dick(Strat) All caps title edited as per forum rule.
10 REPLIES
Community Veteran
Posts: 38,253
Thanks: 940
Fixes: 56
Registered: 15-06-2007

Re: Equity Release..

A general point
If you have a mortgage then the money from the equity release must be enough to fully pay off the mortgage
An alternative (in some cases) is to downsize and pay off the mortgage that way http://www.equityreleasecouncil.com/faqs/
The other thing is that if you do go down the equity release route you are effectively prevented from moving home again due to the very high penalties which will be imposed and the likelihood that you could be in negative equity due to the very high notional interest rates - about 7% at present
Community Veteran
Posts: 7,929
Thanks: 603
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Registered: 02-08-2007

Re: Equity Release..

Not sure about that. I Would explore every other avenue before going down this route.
We all like our privacy but I would consider taking in a lodger or renting out my house and living in something much cheaper if it was going to keep my main property.
Most people invest a large portion of their lives to pay for a house but it can also mean much more than just the financial value as it's usually a place you have lots of memories and most things set out as you want them.
In my opinion these companies are just vultures and one thing you need to be aware of is they could give you a lump sum and agree you can remain in the house rent free for life, however they can sell out to another company (or go bankrupt and start up as a new company) then change the rules and start charging a rent on the property, if you can't or will not pay then your property will be repossessed. This has actually happened so beware !!  
Community Veteran
Posts: 16,866
Thanks: 1,141
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Registered: 06-11-2007

Re: Equity Release..

The "way out" from equity release is very very very very very very very expensive.....
We wanted to move house, and clear off the equity release debt from the sale of the house, and move to somewhere smaller.... the penalties attached were in the region of £10,000 as a get out of jail payment, and the final amount owing was dependent on the value at the date of sale.... the value fluctuated daily according to the price of gold on the swiss market, or something,.... not sure how it worked exactly, but it was scary, ringing up every week to find out how little we would have left as time went on........
kdoug007
Grafter
Posts: 510
Registered: 17-05-2012

Re: Equity Release..

well in reply i disagree  totally...
 equity release  nowadays.  is  nothing  like  it  was  years  back,
   the  percentage  given on the  value,  of  the  house  depends on ones age/house value,,,
   if  the   Equity  release  does not  cover the  mortgage, the  balance  would  have to be paid  out  of ones  pocket...
 However,, in a  lot  of  cases..  the  mortgage  is  infact  paid  off  and  a  surplace is also  given  to the homeowner,,
 I  would  ask  this  question.. if  one  really  loves  there  home... and  dont  have  the  finance
 to pay of the mortgage..  would  one  want a  re-possesion order!!!
 its  easy to say   go to a  lower  value  house...  but im sure thats  just  about  impossible,
unless ones  house  is  worth  a huge  amount..
 I  did  infact  take  equity  re-lease  and  was  facing  re-possesion  in the months  ahead..
  if the  company went  bust..  equity release is  part of  Ship and  the  solicitors  letter
very clearly  says , one  can  remain  in ones house  always  and  move  if  required..
 For me  it  was a  huge  weight of  my shoulders..and the  best thing i  did
Community Veteran
Posts: 16,866
Thanks: 1,141
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Registered: 06-11-2007

Re: Equity Release..

What are you "totally disagreeing" about?    I hope it is not my posting above,.... that is a 100% personal experience. and happened only a year ago.... How you can "totally disgree" with a personal experience that you have not shared, is beyond me......
kdoug007
Grafter
Posts: 510
Registered: 17-05-2012

Re: Equity Release..

actually it  wasnt  about  your  post...  your  circumstances  are  diffrent  from mine..
  and  i guess  you used  a  diffrent  equity firm  than me  anyway..
  what i am  saying... is  that equity  release  is  fine  for  some... thats  all...
  futher more.. the  firm /solicitors  i used..  gave  me  ,  enough details  about  everything..
jim:quote
  .. 
Community Veteran
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Registered: 21-03-2011

Re: Equity Release..

All asset release schemes are essentially a bet against interest rates. You are borrowing against the value of an asset and the effects of price inflation. If the prevailing interest rate goes against you, then there may be tears. If the interest rate goes against the lender you can assume their contract will give them some protection. If the underlying value of the asset (property crash/equity market/pension fund) goes down you can get caught again.
Sadly many of those caught in the trap are those least able to afford the effects. Having said that, there are some who's circumstances can benefit from asset release.
Now Zen, but a +Net residue.
kdoug007
Grafter
Posts: 510
Registered: 17-05-2012

Re: Equity Release..

Alaric...assuming i  dont  move...  the  interest  rate  remains  the  same  .
 well  thats  what mine  is..
the  solicitor/company   gave it in  in writting,  so i know the  exact  position
and  it  shows  the  effect  if  moving  also...
Community Veteran
Posts: 7,929
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Registered: 02-08-2007

Re: Equity Release..

The solicitor/company gave it in writing but what does that mean ? It means that the company you took out the deal with has a contract with you for certain things BUT any company can go bust, when that happens the receiver steps in and can dispose of any assets he thinks fit, so if he sells the assets to another company they are not bound by any previous agreements.
This has happened many times, for instance several furniture stores took money from customers the day before they went bust and those customers lost money or goods they had already paid for ! Other examples were the Building Societies with their endowment mortgages where people were promised a house paid off and a lump sum to go with it but in many cases that did not happen.
So what am I trying to say ?............ simply this, because you have a Legal contract that applies at this moment in time there can be no guarantee those conditions cannot change.
Talking of contracts how many workers have had contracts of employment that have been changed to the detriment of individuals who got little or no say in those changes !
jim:quote
kdoug007
Grafter
Posts: 510
Registered: 17-05-2012

Re: Equity Release..

gleneagles.. just  to inform you  the equity is  governed  by ship  AND  fsa...
furthermore  i contacted the  equity  company  and  the  house
  would  still be  yours  to live in