EquityReleaseForum.org
open discussion on equity release
I have only just started researching the options of equity release for my mother aged 83. my father is very ill and she would like to secure her future and pay off a few debts. I have been advised that equity release is a very expensive way of what is in effect a loan. would i be right in saying that as a general rule a bank mortgage would be a better way forward for an amount of 10 to 20,000. she has a property with no mortgage on it of approx 170,000
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Hi Gill
I've been looking at equity release for a few months now, and will probably be going ahead at some point but it can be quite confusing as there are quite a lot of different plans to look at.
As far as I can tell, there are 2 main kinds of equity release: one is where you sell some of your home but can stay in it (you will tend to receive less than its market value for this privelege so this can be expensive if you die shortly after taking it) and the other is the one that you refer to.
Basically it's like a normal mortgage but instead of making repayments the interest keeps adding on over time. For this reason the overall cost would tend to be more than a normal morgage but you have the benefit of not having to make any repayments so you've got a little more to play with. If your mum can afford to make repayments comfortably she should maybe consider a mortgage or an equity release plan where she pays the interest instead of letting it roll up.
Sorry if this is a bit garbled.
BallroomDancer
I would concur with Ballroom dancer but at age 83 it is unlikely any bank would lend on a standard basis to your mum anyway. Depending on her income then Halifax Home Retirement Plan or Scottish Widows Propery Account may be the solution but I would recommend seeking Independent Financial Advice.