Something me Mum and dad are thinking about. Does anyone know the cost of the fees if they get accepted? Early exit fees , can it be transferred if they decide to downside at a later date? Cheers all.
Something me Mum and dad are thinking about. Does anyone know the cost of the fees if they get accepted? Early exit fees , can it be transferred if they decide to downside at a later date? Cheers all.
Fees can vary but typically between 1% and 3% of the loan value - this will include solicitor fees and set-up fees. Yes there will likely be early redemption fees that will vary depending on how long the loan has been in place - tends to be a sliding scale downwards the longer the loan has been active. Maybe 5% for an early repayment and then reducing after say 5 years. Yes you can transfer an equity release loan when downsizing, as long as there is sufficient headroom on the new equity. This wouldn't cover moving into paid care and if that were the case the loan would need to be repaid.
Just one observation - depending on their accommodation needs now, of course, it might be better to downsize to release equity rather than paying rolled up interest within an equity release mortgage.
I never thought I would write this, but here goes...
I would be interested to see what @golfaddick says about this subject.
It can be a very good way of releasing money built up in property but you have to understand all the risks too.
A lot of safeguards have been put into place over the years & all reputable lenders have signed up to SHIP, meaning negative equity guarantees & the ability to move home etc.
If going down the pure ER route with interest rolling up then be aware the debt doubles roughly every 12-14 years. For that reason I wouldn't recommend it to anyone under the age of 75. There are plans where you can pay some or all of the interest on a monthly basis, thus keeping more of the remaining equity for inheritance/downsizing.
Usually it is very good for people who have no dependants and/or children and have no other assets & small pension income. If there are children then make sure they know about it & are involved with the process.
Fees are usually pretty low & most can be taken from the equity when released. Some ER advisors may charge a fee but I never did as the lender will pay an introducer a fee of 2%-3% of the loan so felt that would cover it.
I would also add if you are concerned about early exit fees then ER is not for you. Downsizing/going into care are all covered under SHIP (up to a certain limit as @bobmunro mentioned). The max you can released is based on your age at outset. Roughly 30-35% if you are mid-late 70's. I personally wouldn't do it if the property value is less than £400k, but does really depend on how much equity they are looking to release.
I looked at this for my Father in Law a few years back, it does get expensive which I guess even more so now with interest rates increased, probably north of 4% now.
I looked at this for my Father in Law a few years back, it does get expensive which I guess even more so now with interest rates increased, probably north of 4% now.
Well north at the moment - best fixed is just shy of 6% and go up to 8%.
I looked at this for my Father in Law a few years back, it does get expensive which I guess even more so now with interest rates increased, probably north of 4% now.
Well north at the moment - best fixed is just shy of 6% and go up to 8%.
Ouch! @6% 11/12 years to double the debt. It was probably 4/5 years ago now but was nearer 3.
My BIL parents did this, afterwards his dad died, his mum a few years later decided she wanted to move to Chelmsford from St, Nicholas at Wade. As that’s where she had spent most of her adult live there and is where my BIL lives. The problem was there was a big get out fee and it restricted her choice of property.
I would say if they’re on their own, not so much of a problem, but they are a couple, it would be better to down side.
always thought equity release is a bit of a con. As sad/bitter it is to leave a place you may have spent most of your life at and raised your family at, it's better to sell and downsize imho, for so many reasons. You don't also want to downsize and sorting out moving/packing when you're struggling to manoeuvre around your home, which is when most people decided to downsize.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
I’m sure you would but make sure you go with your parents so you can make sure they don’t take advantage. My Granddad was quite old and got completely fucked over with his. Don’t let them make your parents sign something they’re not comfortable with.
Thanks for the replies. Tbh they don't know what they want to do. It's not the family home they moved to the current home 8 years ago. For them to downsize to make it worthwhile I can't see them being happy. I should imagine there's 1000s of couples out there who in their 40s said we will just sell up and downsize when we get to 70. Years go by, get used to the size house your in and can't face the thought of downsizing. Me, it will be a case of sell the house and live in a caravan if it means retiring.
My parents downsized from my childhood home about 7 years ago, and are very pleased that they have. Their new place is an 80s terrace so needs much less maintenance than the big Victorian semi they used to have, they have a few pots of plants but someone else is responsible for the communal gardens, and it has an additional downstairs loo (which comes in very handy!). Having had the experience of having to help my grandparents clear their house to go into sheltered accommodation in their late 80s, they decided they'd much rather do it at their own pace just before they turned 70, rather than having it forced on them later due to ill health.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
I am.sorry for your loss but it is no different to any other mortgage or loan secured against a property. One a borrower passes away the loan has to be paid before anyone can sell the property.
As I have said, and reiterated by @Covered End, it is recommended that borrowers involve their families in all discussions around Equity Release.
And as to ER being the next "mis-sold " scandal, this is now very highly regulated & checks are put in place to make sure that no-one is taken advantage of.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
Is there no safeguarding?
No safeguarding, the "advisor" "selling" the ER, has no legal obligation at all to talk to anybody other than the purchaser. The elderly confused person is sold a product, which is totally unsuitable. When other solutions maybe possible. The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail. Don't know how anybody can work in this industry, should hang their heads in shame
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
Is there no safeguarding?
No safeguarding, the "advisor" "selling" the ER, has no legal obligation at all to talk to anybody other than the purchaser. The elderly confused person is sold a product, which is totally unsuitable. When other solutions maybe possible. The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail. Don't know how anybody can work in this industry, should hang their heads in shame
You've clearly had a bad experience, but doesn't make everyone in an industry bad. If it did then after my last year there's definitely no good kitchen sellers, carpenters, electricians, builders or plumbers!
On your original post you complained that a 85k loan increased to 100k in 4 years. I'm not sure what your expectation was, rate of interest, fee's etc but on straight interest it's around 5.5%.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
Is there no safeguarding?
No safeguarding, the "advisor" "selling" the ER, has no legal obligation at all to talk to anybody other than the purchaser. The elderly confused person is sold a product, which is totally unsuitable. When other solutions maybe possible. The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail. Don't know how anybody can work in this industry, should hang their heads in shame
You've clearly had a bad experience, but doesn't make everyone in an industry bad. If it did then after my last year there's definitely no good kitchen sellers, carpenters, electricians, builders or plumbers!
On your original post you complained that a 85k loan increased to 100k in 4 years. I'm not sure what your expectation was, rate of interest, fee's etc but on straight interest it's around 5.5%.
I had no expectation, my wife was not informed by anybody of my late Mother-in-Laws decision, and my Mother-in-Law, would have been entitled to a range of state help. The advisor, convinced my M-i-L not to tell the family, "as we may have confused things" The co-signer to the contract was a equally frail next door neighbour. While all legal, not so sure about the morals.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
Is there no safeguarding?
No safeguarding, the "advisor" "selling" the ER, has no legal obligation at all to talk to anybody other than the purchaser. The elderly confused person is sold a product, which is totally unsuitable. When other solutions maybe possible. The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail. Don't know how anybody can work in this industry, should hang their heads in shame
A friend's parents used equity release to finance an extension to their house some time back in the 90s. At the time the loan was taken out the base rate was 4% and the interest rate charged was fixed at 7% or thereabouts. A 3% margin didn't seem to me to be exorbitant. After the old fella died the family became concerned about the way the debt was compounding, and felt they were being ripped off. I worked through the numbers for them as a sanity check. Because, unlike a mortgage, nothing is being paid against either the principal or the interest, the rate of increase in the debt is frightening. There was nothing wrong with the calculation of the debt, even though they found it hard to believe. As you might expect, the lender wanted a big early repayment penalty to let them out and refinance elsewhere at a much lower rate, so much so that it was a marginal decision. Thinking they had little to lose the family went to the financial ombudsman who found mostly in their favour, and happily they were able to get out at a much lower cost. The lender was that well known firm of disreputable loan sharks, Aviva.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
Is there no safeguarding?
No safeguarding, the "advisor" "selling" the ER, has no legal obligation at all to talk to anybody other than the purchaser. The elderly confused person is sold a product, which is totally unsuitable. When other solutions maybe possible. The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail. Don't know how anybody can work in this industry, should hang their heads in shame
You've clearly had a bad experience, but doesn't make everyone in an industry bad. If it did then after my last year there's definitely no good kitchen sellers, carpenters, electricians, builders or plumbers!
On your original post you complained that a 85k loan increased to 100k in 4 years. I'm not sure what your expectation was, rate of interest, fee's etc but on straight interest it's around 5.5%.
I had no expectation, my wife was not informed by anybody of my late Mother-in-Laws decision, and my Mother-in-Law, would have been entitled to a range of state help. The advisor, convinced my M-i-L not to tell the family, "as we may have confused things" The co-signer to the contract was a equally frail next door neighbour. While all legal, not so sure about the morals.
Sorry to hear that, but as I say doesn't make everyone in the industry bent/dodgy/no morals. I think as years go by it will become a more and more popular thing.
My Mother-in Law, was tied into a Eq Release, when she passed with Interest was something like £60 a day, and in 4years a 85k loan which ended up 34k after paying off mortgage and fees, became 100k to settle
Its a stich up start to finish. Don't touch with a barge poll
With due respect, I disagree. And I expect I have a lot more experience dealing with Equity Release than you have. I sometimes find that the most disgruntled people are beneficiaries who feel their inheritance has been "stolen" from them.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
A "Charge" is put against the property, and bully boy tactics used to get the ER paid, when a family maybe totally unaware of the ER, and grieving over the death of family member. This is the next Mis-sold scandal in the making
Family members should be informed by the person taking out the mortgage/equity release. It's clearly not the lenders fault they weren't advised.
Is there no safeguarding?
No safeguarding, the "advisor" "selling" the ER, has no legal obligation at all to talk to anybody other than the purchaser. The elderly confused person is sold a product, which is totally unsuitable. When other solutions maybe possible. The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail. Don't know how anybody can work in this industry, should hang their heads in shame
You've clearly had a bad experience, but doesn't make everyone in an industry bad. If it did then after my last year there's definitely no good kitchen sellers, carpenters, electricians, builders or plumbers!
On your original post you complained that a 85k loan increased to 100k in 4 years. I'm not sure what your expectation was, rate of interest, fee's etc but on straight interest it's around 5.5%.
I had no expectation, my wife was not informed by anybody of my late Mother-in-Laws decision, and my Mother-in-Law, would have been entitled to a range of state help. The advisor, convinced my M-i-L not to tell the family, "as we may have confused things" The co-signer to the contract was a equally frail next door neighbour. While all legal, not so sure about the morals.
Do you mind me asking how long a go this was bunking?
Comments
I would be interested to see what @golfaddick says about this subject.
Yes there will likely be early redemption fees that will vary depending on how long the loan has been in place - tends to be a sliding scale downwards the longer the loan has been active. Maybe 5% for an early repayment and then reducing after say 5 years.
Yes you can transfer an equity release loan when downsizing, as long as there is sufficient headroom on the new equity. This wouldn't cover moving into paid care and if that were the case the loan would need to be repaid.
Just one observation - depending on their accommodation needs now, of course, it might be better to downsize to release equity rather than paying rolled up interest within an equity release mortgage.
A lot of safeguards have been put into place over the years & all reputable lenders have signed up to SHIP, meaning negative equity guarantees & the ability to move home etc.
If going down the pure ER route with interest rolling up then be aware the debt doubles roughly every 12-14 years. For that reason I wouldn't recommend it to anyone under the age of 75. There are plans where you can pay some or all of the interest on a monthly basis, thus keeping more of the remaining equity for inheritance/downsizing.
Usually it is very good for people who have no dependants and/or children and have no other assets & small pension income. If there are children then make sure they know about it & are involved with the process.
Fees are usually pretty low & most can be taken from the equity when released. Some ER advisors may charge a fee but I never did as the lender will pay an introducer a fee of 2%-3% of the loan so felt that would cover it.
I would also add if you are concerned about early exit fees then ER is not for you. Downsizing/going into care are all covered under SHIP (up to a certain limit as @bobmunro mentioned). The max you can released is based on your age at outset. Roughly 30-35% if you are mid-late 70's. I personally wouldn't do it if the property value is less than £400k, but does really depend on how much equity they are looking to release.
Its a stich up start to finish. Don't touch with a barge poll
Tbh they don't know what they want to do.
It's not the family home they moved to the current home 8 years ago.
For them to downsize to make it worthwhile I can't see them being happy.
I should imagine there's 1000s of couples out there who in their 40s said we will just sell up and downsize when we get to 70.
Years go by, get used to the size house your in and can't face the thought of downsizing.
Me, it will be a case of sell the house and live in a caravan if it means retiring.
As long as the borrower(s) know what they are taking on (usually a rolled-up interest only loan) then it can be a good way of releasing money that is tied up in a property. As I mentioned earlier, interest can be paid by the borrower if they so wish, usually from as little as £50pm all the way up to the actual monthly payment. This can also be altered over time & ultimately ceased should the borrower not afford to / cant be arsed to spend their income repaying a debt that will only benefit their beneficiaries.
Many people in their 80's are sitting on a big asset (their house) due to the explosion in house prices but have meagre pensions. 40 years ago pensions were mainly for those working for the state or big companies and many women did not have their own pension - even the state pension was claimed by the husband with an element for a non-working wife.
This is the next Mis-sold scandal in the making
As I have said, and reiterated by @Covered End, it is recommended that borrowers involve their families in all discussions around Equity Release.
And as to ER being the next "mis-sold " scandal, this is now very highly regulated & checks are put in place to make sure that no-one is taken advantage of.
The elderly confused person is sold a product, which is totally unsuitable.
When other solutions maybe possible.
The whole ER industry is rotten to its core, making its money of off the backs of pensioners and the old and frail.
Don't know how anybody can work in this industry, should hang their heads in shame
On your original post you complained that a 85k loan increased to 100k in 4 years. I'm not sure what your expectation was, rate of interest, fee's etc but on straight interest it's around 5.5%.
The advisor, convinced my M-i-L not to tell the family, "as we may have confused things"
The co-signer to the contract was a equally frail next door neighbour.
While all legal, not so sure about the morals.
At the time the loan was taken out the base rate was 4% and the interest rate charged was fixed at 7% or thereabouts. A 3% margin didn't seem to me to be exorbitant.
After the old fella died the family became concerned about the way the debt was compounding, and felt they were being ripped off. I worked through the numbers for them as a sanity check. Because, unlike a mortgage, nothing is being paid against either the principal or the interest, the rate of increase in the debt is frightening. There was nothing wrong with the calculation of the debt, even though they found it hard to believe. As you might expect, the lender wanted a big early repayment penalty to let them out and refinance elsewhere at a much lower rate, so much so that it was a marginal decision. Thinking they had little to lose the family went to the financial ombudsman who found mostly in their favour, and happily they were able to get out at a much lower cost. The lender was that well known firm of disreputable loan sharks, Aviva.