Equity release advice (1 Viewer)

stay_up_skyblues · Jul 13, 2022

Has anyone any experience of this?

My father in law passed away a couple of months ago and my mother in law (60 years old so not able to draw state pension) is in a bit of a pickle. He left enough cash to last probably until Christmas but after that the cupboard is bare.

She’s never worked a day in her life and to be honest isn’t cut out for it. She’s not really a people person and has mobility issues that fall short of a disability. I don’t think getting a job at this late stage is going to work for her.

Her house is fully owned with no mortgage and I estimate would fetch £160 - £180k in the current climate. I’m going up there to discuss her options with her, one of which is to sell up, buy a retirement flat type property for say £100k and live off the rest until she hits her state pension.

The house does have sentimental value though and I believe she’d prefer not to leave. I’m thinking of equity release. I can’t really make sense of how it works in terms of pounds and pence online. Basically I’m interested to know, if she were to release £50k, how much will likely be paid back if she lives for another 20/30 years? I think it would be the lifetime mortgage she’d need with no repayments until she leaves us. The other option where you get a % for selling part of your house looks a bit murky.

Just some basic example figures would be ideal

rob9872 · Jul 13, 2022

Fuck sentimental value and equity release is a huge con imo. So many unscrupulous out there wanting a piece of hard earned for a song. Your option of sell and get a retirement property is a clear winner imo.

SAJ · Jul 13, 2022

rob9872 said:
Fuck sentimental value and equity release is a huge con imo. So many unscrupulous out there wanting a piece of hard earned for a song. Your option of sell and get a retirement property is a clear winner imo.

stay_up_skyblues said:
Has anyone any experience of this?

My father in law passed away a couple of months ago and my mother in law (60 years old so not able to draw state pension) is in a bit of a pickle. He left enough cash to last probably until Christmas but after that the cupboard is bare.

She’s never worked a day in her life and to be honest isn’t cut out for it. She’s not really a people person and has mobility issues that fall short of a disability. I don’t think getting a job at this late stage is going to work for her.

Her house is fully owned with no mortgage and I estimate would fetch £160 - £180k in the current climate. I’m going up there to discuss her options with her, one of which is to sell up, buy a retirement flat type property for say £100k and live off the rest until she hits her state pension.

The house does have sentimental value though and I believe she’d prefer not to leave. I’m thinking of equity release. I can’t really make sense of how it works in terms of pounds and pence online. Basically I’m interested to know, if she were to release £50k, how much will likely be paid back if she lives for another 20/30 years? I think it would be the lifetime mortgage she’d need with no repayments until she leaves us. The other option where you get a % for selling part of your house looks a bit murky.

Just some basic example figures would be ideal

Just worked a few figures out for you. In interest over a 10 year period they would charge your mother in law approximately £30500 for having £50k now. Primarily because the interest charges are compounded year on year.
Personally I would never touch equity release as in my view it is balanced totally in favour of the company giving the money. I’m also of the opinion they rely on the “sentimental” for people to do it.
I’m not a financial advisor just a guy who has a level head when it comes to finances. Undoubtedly there are better out there than me who are qualified to give you an informed answer but I’ve just done some basic interest charges to see what it would cost you.
Good luck.

stay_up_skyblues · Jul 13, 2022

Cheers lads. Just got back she’s not in a good way. Not sure moving is gonna do her much good mentally. Have agreed she will have a think and we will have a no pressure/commitment chat with Saga next week RE equity release and also get house valued.

As far as I can see the only people to lose out by the loan would be her kids through reduced inheritance (assuming she doesn’t go into care). That is the least of our worries, they’d all forgo anything when she passes to see her right now and for the rest of her life.

Ill be studying all the terms and conditions if she does decide to godown that route.

rob9872 · Jul 13, 2022

stay_up_skyblues said:
Cheers lads. Just got back she’s not in a good way. Not sure moving is gonna do her much good mentally. Have agreed she will have a think and we will have a no pressure/commitment chat with Saga next week RE equity release and also get house valued.

As far as I can see the only people to lose out by the loan would be her kids through reduced inheritance (assuming she doesn’t go into care). That is the least of our worries, they’d all forgo anything when she passes to see her right now and for the rest of her life.

Ill be studying all the terms and conditions if she does decide to godown that route.

All the best mate, do your due diligence is all you can do for her and let her feel it's her decision whatever the outcome I guess.

Rusty Trombone · Jul 13, 2022

https://www.moneysavingexpert.com/mortgages/equity-release/

A decent summary here. Suggests that if going the equity release route don't take more than you need as a lump as not only does the interest rack up, but having the cash can also affect benefits (might not be applicable in this case).

stay_up_skyblues · Jul 13, 2022

Rusty Trombone said:
https://www.moneysavingexpert.com/mortgages/equity-release/

A decent summary here. Suggests that if going the equity release route don't take more than you need as a lump as not only does the interest rack up, but having the cash can also affect benefits (might not be applicable in this case).

Cheers. Toilet reading for tomorrow The whole purpose of potentially taking this option is to avoid having to claim benefits and get her through to state pension.

She did ask if we wanted a lodger in our new house at the end of the month……:

Deleted member 5849 · Jul 14, 2022

stay_up_skyblues said:
Cheers. Toilet reading for tomorrow The whole purpose of potentially taking this option is to avoid having to claim benefits and get her through to state pension.

She did ask if we wanted a lodger in our new house at the end of the month……:

If she's able to claim benefits, what stops her? The system is there to support, after all.

And has she considered a lodger herself?!?

stay_up_skyblues · Jul 14, 2022

Deleted member 5849 said:
If she's able to claim benefits, what stops her? The system is there to support, after all.

And has she considered a lodger herself?!?

Having never claimed I’m not 100% on the process. But, as far as I can gather, all she’s entitled to is JSA (or it’s universal credit equivalent). And to be eligible I believe you have to see a work coach every other week, take any job they find for you and prove you’re spending most of your time searching for work.

She’s never worked and doesn’t consider herself physically or mentally suitable for it at this late stage in her life. That said, she technically could work. I don’t disagree with the system myself and she is where she is.

We discussed her having a lodger as an option. But this is a lady who doesn’t use taxis or walk around alone for fear of other people. So a stranger moving in is a non-starter unfortunately.

Deleted member 5849 · Jul 14, 2022

stay_up_skyblues said:
She’s never worked and doesn’t consider herself physically or mentally suitable for it at this late stage in her life. That said, she technically could work. I don’t disagree with the system myself and she is where she is.

Has she been assessed by a doctor in that respect? If not, is it worth seeing if she is actually physically and mentally unable to work. If she were, it'd solve a lot of problems!

I dunno, my main concern from what you've said is that sure, she could take the equity release and solve the immediate problem, but she has potentially another 20 years plus ahead of her and a state pension won't go far either, so she's just kicking the can down the road to a time when she's even less able to help herself and you, for that matter, will be less able to help her like you are now, when she finds herself totally out of cash if the house needs repairs or something and she has to leave as a result.

stay_up_skyblues · Jul 14, 2022

Deleted member 5849 said:
Has she been assessed by a doctor in that respect? If not, is it worth seeing if she is actually physically and mentally unable to work. If she were, it'd solve a lot of problems!

I dunno, my main concern from what you've said is that sure, she could take the equity release and solve the immediate problem, but she has potentially another 20 years plus ahead of her and a state pension won't go far either, so she's just kicking the can down the road to a time when she's even less able to help herself and you, for that matter, will be less able to help her like you are now, when she finds herself totally out of cash if the house needs repairs or something and she has to leave as a result.

You’re quite right on a number of things mate and I have encouraged her to go the doctors and see if she can get signed off as unfit for work but she won’t get on board (yet).

It’s hard to explain how she is but I’m pretty sure that if she was a child now she’d be diagnosed on the autistic spectrum (our youngest is and I wonder if he’s inherited from her). There seems to be a lack of grasp of reality over these things my father in law did literally everything for her. She didn’t even have a bank account until last month.

My basic maths have the standard state pension (£140 a week?) just about covering her utility bills and shopping etc. mindful she doesn’t pay any rent or mortgage. The small bit she gets from his private pension would cover her two pub trips a week and week in Blackpool (yep, Blackpool ) every year. But yes, if any significant repairs need doing she’d be on her arse and we’d all chip in.

Don't get me wrong, the idea of Saga or similar having £100k plus back from a £30/40k loan looks outrageous. But for her it may be the most convenient/least stressful option. I’m also mindful that the house will go up in value and so what is paid back in, say, 20 years sounds a lot now but will be relative to what the house actually sells for.

Tricky situation and I’ve taken out multiple life insurance policies and will be loading up my savings ISAS to make sure my lot never have to go through this!

edit: my big concern is if she needs care at some stage in the future or does eventually decide to downsize and how such a loan could cause problems then. If she decides to explore further that’s what I need to go through with a fine tooth comb.

Robinshio · Jul 14, 2022

if her pension is only 140 she would then also get a pension credit so would top her up at current rates to £182
This would also give entitlement to certain other benefits

Sky_Blue_Dreamer · Jul 14, 2022

stay_up_skyblues said:
You’re quite right on a number of things mate and I have encouraged her to go the doctors and see if she can get signed off as unfit for work but she won’t get on board (yet).

It’s hard to explain how she is but I’m pretty sure that if she was a child now she’d be diagnosed on the autistic spectrum (our youngest is and I wonder if he’s inherited from her). There seems to be a lack of grasp of reality over these things my father in law did literally everything for her. She didn’t even have a bank account until last month.

My basic maths have the standard state pension (£140 a week?) just about covering her utility bills and shopping etc. mindful she doesn’t pay any rent or mortgage. The small bit she gets from his private pension would cover her two pub trips a week and week in Blackpool (yep, Blackpool ) every year. But yes, if any significant repairs need doing she’d be on her arse and we’d all chip in.

Don't get me wrong, the idea of Saga or similar having £100k plus back from a £30/40k loan looks outrageous. But for her it may be the most convenient/least stressful option. I’m also mindful that the house will go up in value and so what is paid back in, say, 20 years sounds a lot now but will be relative to what the house actually sells for.

Tricky situation and I’ve taken out multiple life insurance policies and will be loading up my savings ISAS to make sure my lot never have to go through this!

edit: my big concern is if she needs care at some stage in the future or does eventually decide to downsize and how such a loan could cause problems then. If she decides to explore further that’s what I need to go through with a fine tooth comb.

There isn't an age limit to getting diagnosed.

I know she might be reluctant to be assessed as people of a certain generation don't necessarily see it as a medical condition, but it would be worth finding out.

If not, you've mentioned about her fear and stuff so you could probably get her signed off for stress as it would be overwhelming for her.

I know someone who's been going through a similar thing for a few years. Their dad did literally everything for his wife and when he died she was totally helpless. Couldn't do even the simplest thing and her daughter pretty much had to take over the running of her life.

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