For help, advice and discussion about stuff not related to aviation. Play nice: no religion, no politics and no axe grinding please.
By avtur3
FLYER Club Member  FLYER Club Member
#1834615
This may be a sensitive subject and maybe folks would not feel comfortable about opening-up, however, I'm looking at this as **** or bust so I don't mind starting the conversation.

I'm early retired due to being made redundant. For health reasons, it was right to lock into my occupational pension early (with appropriate discount/reductions) in order to become mortgage (stress) -free.

I have continued working as a 'consultant' within the industry of my expertise, unfortunately, that is commercial aviation, I've not had any work in over a year, and realistically I'm not sure I should even think about it returning in the future. I'm a one-man 'LTD' company so there has been zero support from the government.

I've been able to make ends meet over the last twelve months due to part-time work in the motor sector which has been allowed to carry on.

Having spent all my life working towards being debt/mortgage-free (and achieving that 7 years ago) I am now wondering if there may be some sense in looking into equity release. We live in a £500k house but we have many desires about making our house somewhat more of a home but at a cost. When we moved here, 3 years ago, at the very last minute we had to take a £20k hit on our sale., for various reasons we had to 'suck it up . The resulting move was 100% the right thing to do.

Mrs A is totally against the idea of equity release, she wants the full value of the house to transfer to our two daughters, which I totally understand. However, our two daughters do not agree with that. Mrs A is only 56 where I'm (nearly) 65 so any equity release calculations are based around Mrs Avtur being only 56.

An equity release against the value of our property may enable our kids to do things now, rather than wait until we pop our clogs. I would rather like to depart this world with a zero balance, knowing that my wife and our daughters have gained the most from my efforts in life.
Last edited by avtur3 on Sat Mar 20, 2021 9:36 am, edited 1 time in total.
By johnm
FLYER Club Member  FLYER Club Member
#1834616
I’d say you are too young for equity release unless you are desperate, should you wish to move later in life the penalties can be eye watering
#1834619
avtur3 wrote:I would rather like to depart this world with a zero balance, know that my wife and our daughters have gained th most from my efforts in life.

It's a complex minefield and I am sure there are range of different options…..however my gut feel is equity release wold be exactly the way to minimise the legacy left to your family. A charge against the property with the rates as they are is likely to result in there being little left given your ages.

My instinct is a conventional mortgage covering borrowing against the house would be a better option.

I have never had the need to investigate it properly and only know of a neighbour's experience. Being on his own he had no requirement for a high value asset tying up his wealth, He released equity to buy a car. Whilst I can't remember the exact figures my memory is his £34K car in 2005 was a debt of circa £60K within 6 or 7yrs. That's not to say he had a good deal. :wink:
JAFO liked this
By avtur3
FLYER Club Member  FLYER Club Member
#1834621
johnm wrote:I’d say you are too young for equity release unless you are desperate, should you wish to move later in life the penalties can be eye watering


Thanks, I understand your comment due to Mrs Avtur's relatively age, hence my post about my concerns.
User avatar
By JAFO
#1834627
I always chuckle when I see the equity release adverts on the TV where they've taken the equity and used it to do up the house - it's someone else's house.

I can't make up your mind for you but I think Mrs A is right. Not necessarily that you have to keep it for the kids but that equity release is unlikely to be the way forward.
User avatar
By Flyin'Dutch'
FLYER Club Member  FLYER Club Member
#1834631
The only equity release to ever consider is selling an expensive house and moving into a cheaper one, anything else is shaf**g yourself well and truly.

A 500k house comes with 500k house maintenance bills, and downsizing may well make your monthly and annual outgoings easier to carry too.

In addition, you write that you wanted to be mortgage free to have a stress free life, equity release is taking you back to where you were.

The suggestion to transfer the value of the house when you have both gone is noble but hopefully you will live long enough that by the time this may be of any relevance your kids are old, wise and financial secure enough that this is irrelevant.
cockney steve, T6Harvard, JAFO and 5 others liked this
User avatar
By Nero
FLYER Club Member  FLYER Club Member
#1834633
You should be vary wary of equity release.

They are essentially another mortgage which sits on the house until you die or move into long-term care.

You'll either have to be paying interest regularly (effectively you're back to making mortgage payments) or the interest will compound until one of those two events above.

If you don’t pay off the interest at regular intervals, the entire sum will compound – so at around 5 per cent interest, the amount you owe would double every 15 years.

Most have a clause to not go above the value of the home, but you could effectively give away the house you (probably) paid £800k or more for via your old mortgage, to get an equity release now of £125k-£250k (typical 25-50% range for these things).

~ Scott
T6Harvard, JAFO liked this
User avatar
By AndyR
FLYER Club Member  FLYER Club Member
#1834648
I talked my mother out of it.

HOWEVER....

When she died last year, the only money left by then was just enough to cover her wish for a donation to Guide Dogs for the Blind. All the money had been used for providing her care.

Much as your wife may wish to pass on the family capital, it doesn’t always work that way.

It distresses me to think of what mum did without in order to leave something for my sister and I. Yet still failed to, despite years of canny saving, owning a house, etc.

Maybe not equity release, as I still think that’s a bad idea and very costly, but there are other ways. Just do it now cos if one of you is diagnosed with a long term illness, it’s too late as funds are closely scrutinised from that point on. The government or a care home owner ends up with it and not your children.

I am now a believer in terminating quality life with a zero balance. Once in a care home, or dead, who cares! It ain’t no use to anyone in there.
By A4 Pacific
#1834650
I tend to agree.

Downsize. (I believe the new term is ‘rightsizing’?) Maybe move to a cheaper part of the country for a similar standard of house? Pick the right place and you may see property values increase? Remember, at the end of the day a house is just bricks and mortar. You can have a happy home in a shed! Then if you wish, make regular gifts to your children with the cash you’ve freed up. I believe as long as you survive for 7 years (?) the gift is officially free of tax? :thumleft: That also means care homes can’t get their hands on it.

I’m not at all surprised your wife is against equity release. You are both still pretty young!

But if you disagree with the thoughts here, then you have every right to just get on with what you want to do.
T6Harvard, JAFO liked this
User avatar
By T6Harvard
FLYER Club Member  FLYER Club Member
#1834651
Yep, agree with other comments so far, do not touch equity release. The end result is too often virtually no money left to pass on.

Need to have more spends....
...Difficult, but don't rule out moving - slightly smaller, slightly further from the best school/beach/park/railway station etc may find a house that doesn't need much remodelling and you can release your own equity, albeit minus the cost of moving, and still be mortgage free. I guess you would also have more flexible criteria this time round, so there is more scope. At least take a look?

Also, many people have enough money in other assets to fund some home maintenance.
Mid-century designer furniture has gone through the roof. The price of gold is very high. Check any antiques and collectibles you are prepared to part with.
You may be surprised that things you could happily part with have rocketed in value.

On a lighter note, if you'll forgive the flipancy, you could make a fortune selling glossy photos of your super-cute pup :D
(Actually joking aside, one litter from your pup could easily fetch £12,000 if 6 puppies)
User avatar
By PeteSpencer
FLYER Club Member  FLYER Club Member
#1834659
I agree you are perhaps a bit young for equity release .Depending on the (fixed at the outset) interest rate the debt doubles in about17 years .

In terms of leaving stuff to family that’s not a problem if you’re already knocking on when the equity is released :wink:
User avatar
By skydriller
FLYER Club Member  FLYER Club Member
#1834667
avtur3 wrote:I've not had any work in over a year, and realistically I'm not sure I should even think about it returning in the future.


I feel your pain. I really do. :|

WRT the equity release thing, Id say downsizing is a better solution to free up capital. Do the math. Inheritance is best sorted out while you are fit and well, use a lawyer, its peanuts compared to possible taxes.

Regards, SD..
Rallye liked this
User avatar
By PeteSpencer
FLYER Club Member  FLYER Club Member
#1834674
We downsized nearly 5 years ago and while at the time I figured we were nuts to go through all the hassle ( including moving into rented house while our old place was knocked down) in our seventies it turned out the best thing we could have done and we wished we ’d done it ten years earlier,

Still have two spare bedrooms/bathroom upstairs for when family/visitors come but we don’t go upstairs for the rest of the time.

Modern build means heating is half the cost, LED lights reduce leccy bill and no ‘kin garden to take up two days of my dwindling life every week .

Leaving more time to go flying .....,, :wink:
MikeB, MikeE, Bill McCarthy and 3 others liked this