Equity Release

Alongside the Early Retirement, I thought I would throw in the question of Equity Release, I did it as I took early retirement, then realised the house and gardens were getting, very tatty and needed a substantive re-doing.

Having taken early retirement I found my pension had kept up but my savings would be seriously eroded.

So I let the house pay for it’s own repairs. Being single with no immediate close family it seemed a sensible idea.

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A bit like pensions, there’s equity release and there’s equity release!

In the relatively recent past, there have been many outrageous deals through major UK banks and insurance business, whereby for instance they may lend you say 30% of the equity in your home for a 50% stake perhaps and potentially interest rolling up on top. Plenty of stories I’ve seen whereby the ‘homeowners’ end up with little or no equity left, so it’s been a bloody expensive way of borrowing a few quid.

There are now more reasonable terms available, whereby you’re simply taking an interest only loan, however the interest rolls up and compounds so can get a bit meaty. While interest rates are so low it’s not so bad but I can see it becoming an issue some years down the line, if it’s not used wisely.


I agree, my viewing of the compound interest is that hopefully the house will appreciate at a compound rate as well.

I must admit to seeing an IFA who didn’t turn up in flashy car, and was highly professional , I certainly didn’t take the max amount , though it did pay for a little extra besides the repairs .

I have a friend who recently decided to move post retirement. Using a form of equity release he basically moved from a small house to a larger country property where he no longer owns the whole place but also doesn’t pay any repayments, not does his wife if he dies first. The eventual sale of property repays the loan and interest rolled up at a fixed rate. They have no surviving children but do have grandchildren who are of working age and feel that they would rather have the better life than leave a large amount to grandchildren. I haven’t come to this point in life yet, but it has its attractions.

That depends on where you live.

Admitedly I’ve not lived in the South East for a good few years. For the past 20+ years I lived in areas where the value of houses hasn’t increased that much at all.

Our last house, despite spending £50-60k updating it, increased in sale price by approx £17k in 10 years.

The house we are in now, in theory, has not increased in value at all (4 years in Somerset).

However my brother in law fully owns his house but it requires extensive updating just to get it properly habitable. He is unlikely to move and apart from us has no close relatives. We have suggested equity release to him as a means to updating the house but he is totally against it.

For us, I wouldn’t consider it. Given enough to banks in interest since having a mortgage and they don’t need anymore from me, even if I’m dead or in a care home. I’ve had enough of being their cash machine.

Equity release and car PCP deals will be the next big miss selling scandals, along with extortionate leases on houses.

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