avtur3 wrote:defcribed wrote:Equity release is very definitely not the same thing as re-mortgaging an unmortgaged property.
Re-mortgaging is where you get a sum of money in exchange for a charge over your house and start paying it back straight away.
Equity release is where you get a sum of money in exchange for a much more aggressive charge over your house, but don't pay it back until you die. When you die they take it all back plus a very considerable profit - such a profit as to make the the most expensive 'mortgage' anyone ever had.
What you describe is what I understand is known as a home reversion plan. without doubt they are very poor value and it appears that is the product which has brought such bad publicity to the notion of equity release. By comparison a lifetime mortgage is a very different product. Interest rates are not penal, no proportion of the property is 'sold' to anyone, if the interest on the advance is serviced then in effect it is nothing more than an interest only secured loan, which can be redeemed at any time. Or, if no repayments are made, then the interest compounds up until such time as the policy holder dies, goes into care, or again it can be redeemed at anytime, though obviously there will be a higher amount of interest to be paid. The interest rate is fixed for the life of the product meaning it is possible to project the exact balance at anytime in the future. if the interest is serviced then the balance does not increase.
avtur3 I don't think you read what I said properly. I'm not talking about a lifetime mortgage, and from your original post neither are you. I'm talking about equity release, as are you. Lifetime mortgages are something totally different, remortgaging is something different again.
Just forget equity release. It's a rip-off, a con-job, taking advantage of people who don't really understand money or financial instruments. As with everything there is a very small number of people who, through quirk of circumstance, may genuinely benefit. But it is not you, statistically at least.
Nearly all equity release deals are a last-resort measure for the customer. People who've run out of money, have no income or potential income and a house as their only asset.
Contrary to the tv adverts, well-heeled women in their 60s don't ask "what's equity release, Jack?" as they walk round a National Trust property. The customer is either totally stupid and conned, or else is signing through gritted teeth knowing it's the only way they can eat next month without selling the house.
Schrödinger's cat walks into a bar. And doesn't.