Unlocking cash from your house
just recently I keep receiving booklets from "key retirement " about releasing cash from my property, now the question I ask is , should I bin the booklets and not touch it with a barge pole or do they have some merits
i own my home and do not have any dependents , on one hand I could retire early but on the other could I be on to a big looser
opinions please
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HD, I've seen these too. If I had no one to hand the House over to in a bequest I'd personally go for it
they give you a price for your home-well below the market price to reflect their gamble, you have the cash, they have the house. You & Mrs HD stay in it until you both pass on. The scare stories come from the 'contracts' some have clauses that allow them to enact the contract in their favour. If you go for it then employ a specialist solicitor to check the contract. With a good reputable company it's a win/win, not all(as I've read) are reputable. Good luck.1 -
I agree with R2B. There is another consideration though other than carefully examaning the contract; what happens if you need to move house?
I can no longer manage to cut my grass due to arthritis. I can however pay to have it cut fortnightly within the growing season. If I could not I might neee to move.
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If you want to realise the capital from your home ownership the advice is usually to downsize if that is an option available to you or move to a cheaper part of the country. Age UK have some useful information on this matter on their website so that might well be worth a read. Whenever I have looked at this the amount you can usually secure against the house is relatively small compared to the current value. I think there are a lot of pitfalls. Certainly something to approach with both eyes wide open!!! It will be useful if you can report back what you find.
David
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- Personally I'd be VERY WARY. Things to consider would be
- care at a later date, would you be deemed to have 'lost' your assets and not qualify for 'free' care?
- Amount versus value? Current and projected.
- Is it a loan payable after one or both die? If yes to loan what rate of interest charged, is it fixed or variable and added annually?
- What about running repairs and maintenance whilst you occupy?
- What about mobility issues in the future can you modify the house? What would be the options if you couldn't live there any more? Private renting or housing trust dwellings? Would you qualify for the latter?
- Do you have anyone you may wish to pass an inheritance to, however small?
- What about releasing cash through a mortgage? I understand these can be until your 80 now. Gives you control of your house/home and so long as you can repay each month it might suffice. You'll have income once you reach State Pension age in addition to the capital interest.
- Where would you invest the capital released to get a secure decent rate of interest?
- Check out everything you can before asking them anything as I think I read on their TV advert there's a charge if you don't go ahead.
- How long until you reach State Pension age?
- How much do you think you'd need to live on now? and with inflation?
- what would happen if the company became insolvent or was taken over?
- The list is endless and personally I wouldn't be happy it all sounds too good to be true. But I have done no more than read the ads. I'd certainly check out Which? Guides etc.
- Plenty of food for thought. Out of interest do you own your shop? Maybe selling that could release sufficient capital.
- I think it'd pay to consult an independent financial adviser.
- Do let us know what you discover if you do pursue it. Don't forget there are other companies that do similar and it costs lots to advertise on TV and the press as well as posted adverts, they have to be paid for and a profit made 😉
- Not easy to gaze into the future without a crystal ball. Mine is only showing cloud at present so no help to me or others 😂😂😂
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This is something that I suppose many of us have had to think about. It is after all a massive asset that to be honest I would rather like to be able to capitalise on! I can do a lot of 'living' by releasing capital from the asset and hopefully, still leave a legacy.
This is something that at some point we will have to look into - yes with eyes wide open!
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Thanks for your thoughts , it's not something I would just jump in to without some neutral professional advice
it's 8 years till I reach retirement age ,and just looking at different options of retiring earlier if it was possible and practical and without putting my head on a block
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Is it too good to be true, most probably. The point to remember is the company proposing this is a business and their reason for being is to make a profit and I believe it will be at the home owners expense. Personally I wouldn't touch them with anyone's barge pole.
PS I would google the company name and search for complaints against the company.
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I would also be very wary of this kind of thing. If I wanted to release capital to retire early I think I would prefer to downsize and move as suggested up thread. This of course may not be an option, I do hope it might be Husky, I'm firmly in the camp that if you can afford to retire early then go for it, best thing we ever did.
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Oh Husky I must love you 😉 took an age to find this thread! Couldn't remember the title then had to search through threads I know you'd posted on 😂😂.
I found this, I'm a great money box fan, don't think I've listened to it but you may be interested.
Money Box - Money Box Live: Equity Release - @bbcradio4 http://www.bbc.co.uk/programmes/b08sks7b
I've downloaded it for later. Might recall listening get to it when it was broadcast - memory ain't what it was!
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I gave it a listen and no I hadn't heard it before so not as daft as I feared. Very interesting. Lots to consider but my impression was downsize remortgage etc whilst your still young enough and think hard how long you may live and how your needs may change. I believe you still have both your parents and barring accidents and nasty diseases they say it follows for the next generation.
I don't think people realise how fast compound interest builds up 😲😲😲. 425000 over 10 years 800000. Also about full or partial draw down. Compound interest at 5% or thereabouts. Younger you are the smaller the percentage they would offer. Oh soooo much to think about makes my head hurt lol. But do think best advise on there was would you tell your granny to go ahead?
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