Equity release schemes - advice sought.

[Angilion]

Someone has asked me to look into home equity release schemes for them. The main problem with that is that I know nothing about home equity release schemes A quick look has led me to believe that it's quite a complicated thing and best approached with a good amount of knowledge...which I don't have.

So I'm looking for an independent and reliable guide to them. I considered Age Concern, but it turns out they own their own equity release business and therefore aren't independent.

Of course my advice will stress "seek independent financial advice" (which reputable equity release businesses insist on) and "make sure the business is a member of the Equity Release Council and the Financial Conduct Authority", but even that's best approached with a good amount of knowledge. I know that to my cost - an independent financial advisor strongly advised me to get an endowment mortgage and that ended up costing me a lot of money when I had to sell it for less than I'd paid into it and then get a repayment mortgage.

Background details:

The homeowner is 78 and owns a nice little bungalow in a decent area that could use some maintainence work (nothing serious, just some small stuff that would cost a few thousand to put right). It's worth about £160K. All of their children are poor but financially stable with their own homes, so there's no particular issue about inheritance.

 

[Dis86]

Wouldn't resolution to this be you tell them you know nothing about said equity release and for them to either research it themselves (I'm assuming they're fully compis mentos here) or...as you say direct them to a fully independent financial advisor?

 

[Angilion]

Wouldn't resolution to this be you tell them you know nothing about said equity release and for them to either research it themselves (I'm assuming they're fully compis mentos here) or...as you say direct them to a fully independent financial advisor?

A resolution, yes. But they asked me. So I'd like to be able to provide them with a basic overview they can read before seeing an independent financial advisor. Who will, presumably, charge them.

 

[Dis86]

A basic overview should be available from the website of any release scheme. At least enough to give them what it entails and...as far as I'm aware they're bound by the financial code of conduct to inform them of the negatives.

 

[Thekwango]

Got to agree with Dis86. Without meaning to sound like an ahole but it would seem ego driven on your part to be wanting to help/advise on something you have zero knowledge on. You should be staying out of it, especially where finances are involved. The person has family, let them ask them for advice if they need it. If this person is your friend, be a proper friend and just tell them you know nowt and point them in the direction of a decent independent financial advisor.

 

[Angilion]

Got to agree with Dis86. Without meaning to sound like an ahole but it would seem ego driven on your part to be wanting to help/advise on something you have zero knowledge on. You should be staying out of it, especially where finances are involved. The person has family, let them ask them for advice if they need it. If this person is your friend, be a proper friend and just tell them you know nowt and point them in the direction of a decent independent financial advisor.

They did ask family for advice. Me. You may think it's egotistical to do something your mother asks you to do, but I don't. I also don't understand why you think it's egotistical, nor do I want to.

A basic overview should be available from the website of any release scheme. At least enough to give them what it entails and...as far as I'm aware they're bound by the financial code of conduct to inform them of the negatives.

But they're not required to be independent or give the appropriate weighting to the negatives. Is there really no such thing as an independent introductory guide to equity release schemes? I'll have to do a more thorough search when I get home from work tonight.

 

[Thekwango]

They did ask family for advice. Me. You may think it's egotistical to do something your mother asks you to do, but I don't. I also don't understand why you think it's egotistical, nor do I want to.

Strange you would keep that morsel of information out of the opening post.

 

[Dis86]

But they're not required to be independent or give the appropriate weighting to the negatives. Is there really no such thing as an independent introductory guide to equity release schemes? I'll have to do a more thorough search when I get home from work tonight.

Oh they most certainly won't give the appropriate weighting, you're totally right there. But they will inform you what they are. That allows you to then make an informed choice on whether it's an option to pursue, in which case you then go to a financial advisor, or one to knock on the head right away.

Can you or your siblings (assuming there) not help out, possibly even with a loan on your mums behalf to cover the costs of the work? Perhaps something that can be recouped should she choose to sell the house in the future?

 

[booyaka]

It would have been easier if you had just said it was your mum in the first place...... but anyway.

https://www.moneyadviceservice.org.uk/en/articles/equity-release - basic information.

Not all IFA's have equity release qualification nor permissions. Make sure you specifically ask or check them out first. I know for instance, I have the qualifications, but don't advise on it.

 

[Angilion]

Strange you would keep that morsel of information out of the opening post.

I make a habit of not making personal information public, especially when it's irrelevant. I don't care if you regard that as strange. It probably is nowadays. Perhaps I should have included photos of my breakfast. I understand that's the done thing nowadays.

 

[Angilion]

Oh they most certainly won't give the appropriate weighting, you're totally right there. But they will inform you what they are. That allows you to then make an informed choice on whether it's an option to pursue, in which case you then go to a financial advisor, or one to knock on the head right away.

That's a good point. I'll print a couple off for her (she doesn't use the net).

Can you or your siblings (assuming there) not help out, possibly even with a loan on your mums behalf to cover the costs of the work? Perhaps something that can be recouped should she choose to sell the house in the future?

Probably not (my credit rating is "go away") and I'm sure she wouldn't accept anyway. I've already offered to pay for some other smaller things from my savings and I very much doubt if I'm the only one of her children to have done so.

It would have been easier if you had just said it was your mum in the first place......

Why? Serious question, since you're being polite about it. I don't understand why it's relevant to anyone else.

but anyway.

https://www.moneyadviceservice.org.uk/en/articles/equity-release - basic information.

Thank you.

Not all IFA's have equity release qualification nor permissions. Make sure you specifically ask or check them out first. I know for instance, I have the qualifications, but don't advise on it.

I went to the website for the Equity Release Council. They have a facility for searching for the nearest IFAs who are members and do advise on it. Do you think that's enough of a check? As far as I can tell, the ERC is the relevant organisation.

 

[dowie]

They're generally going to be a bit of a rip off no?

Even the schemes run with good intentions aren't going to be able to avoid the inherent risks - they've got the possibility of property prices falling and they're limited by the value of the property anyway (well some dodgy schemes perhaps try not to be). There are also some obvious administrative costs.

If she just needs a few thousand (as in X,000) then it seems a bit silly, the fees alone could be at least couple of grand or so and if she only wants to borrow a few grand in the first place then...

AFAIK This stuff is more aimed at people taking XX,000 and upwards out of their homes.

 

[The_Abyss]

I make a habit of not making personal information public, especially when it's irrelevant. I don't care if you regard that as strange. It probably is nowadays. Perhaps I should have included photos of my breakfast. I understand that's the done thing nowadays.

Nobody gives a **** what you had for breakfast other than Instagram. In this case you must surely be able to see that it is relevant, given that you're a potential beneficiary of either the proceeds of the equity release or the inheritance, which is highly relevant given that you're being asked to provide information.

What you haven't provided is the reason for releasing the capital, and that should be the single most important driver of decision making for an equity release. The age of the individual and the house value are just factors to consider how much could be released.

 

[Angilion]

Nobody gives a **** what you had for breakfast other than Instagram.

Nobody should care about other people's irrelevant personal information. I'm glad you got that point.

In this case you must surely be able to see that it is relevant, given that you're a potential beneficiary of either the proceeds of the equity release or the inheritance, which is highly relevant given that you're being asked to provide information.

No, it isn't relevant to what I was looking for - an independent and reliable guide to equity release schemes. I am not relevant to the question I was asking. I am not relevant to the advice I was seeking. I am not relevant to the equity release happening or not. It's not my house.

What you haven't provided is the reason for releasing the capital, and that should be the single most important driver of decision making for an equity release. The age of the individual and the house value are just factors to consider how much could be released.

I'm not making the decision, so I don't need to know the reason. If she wants a big wad of cash to fix some things in her house, to put a golden fountain in her garden, to put on red in a casino for jollies, to buy a sports car or a luxury cruise or to give to strangers at random, that's her business. It's her money.

My part in this is to be able to say "Roughly, it works like this and this or this and the important things to look for are this and this and the nearest properly qualified and certified financial advisor competent to advise on it is this person or that person, here are their phone numbers".

Fortunately, some people in this thread have given me useful information. Others have become obsessed with irrelevant personal information. It's early for breakfast, but I suppose I could take a photo of my cup of tea if you'd like.

 

[Angilion]

They're generally going to be a bit of a rip off no?

Even the schemes run with good intentions aren't going to be able to avoid the inherent risks - they've got the possibility of property prices falling and they're limited by the value of the property anyway (well some dodgy schemes perhaps try not to be). There are also some obvious administrative costs.

If she just needs a few thousand (as in X,000) then it seems a bit silly, the fees alone could be at least couple of grand or so and if she only wants to borrow a few grand in the first place then...

AFAIK This stuff is more aimed at people taking XX,000 and upwards out of their homes.

I think so too - it's basically a bet on when you'll die that's stacked in favour of the equity release business, who will come out ahead except in exceptional circumstances. But it does get you money you don't have to pay back (because it's paid by your estate after you're dead).

 

[Kenai]

https://www.moneysavingexpert.com/news/protect/2010/06/should-you-equity-release

Money Saving Expert takes the view that they don't compare deals as they aren't happy to recommend any, though that isn't to say it should never be done.

The long and short of it is that it can be very very expensive, more so the longer you live.

Note that the link is 8 years old, so the bodies it refers to may have changed.

 

[The_Abyss]

Nobody should care about other people's irrelevant personal information. I'm glad you got that point.



No, it isn't relevant to what I was looking for - an independent and reliable guide to equity release schemes. I am not relevant to the question I was asking. I am not relevant to the advice I was seeking. I am not relevant to the equity release happening or not. It's not my house.



I'm not making the decision, so I don't need to know the reason. If she wants a big wad of cash to fix some things in her house, to put a golden fountain in her garden, to put on red in a casino for jollies, to buy a sports car or a luxury cruise or to give to strangers at random, that's her business. It's her money.

My part in this is to be able to say "Roughly, it works like this and this or this and the important things to look for are this and this and the nearest properly qualified and certified financial advisor competent to advise on it is this person or that person, here are their phone numbers".

Fortunately, some people in this thread have given me useful information. Others have become obsessed with irrelevant personal information. It's early for breakfast, but I suppose I could take a photo of my cup of tea if you'd like.

A frankly bizarre response. The reason for the money will be the first thing a decent adviser will ask, to consider if equity release is the right course of action. It is highly relevant that it is your Mum and her house - again, a decent adviser will invite you and other siblings or potential beneficiaries to be involved in the process should she decide to proceed. If you're being asked to help look for information then I know that if I was in the same position for one of my parents, I'd at least want to understand the motivation for why they were looking at it to see if there was another potential solution first before turning them over to an equity release salesman.

I recommended plenty of Aviva equity release (lifetime mortgages) back in the day. They're simple to understand and they have some good webpages to explain more about them, in particular the impact on any current benefits being received. That's a good place to start, along with the principle that equity release should be, for most people, a solution of last resort.

 

[Cold Fusion]

Does her pension income potentially cover a loan? Sounds like to me that would be a far simpler way of raising a "few thousand" to update the kitchen or put a level access shower room in

 

[Pipe & Slippers]

Years ago, I used to work for a company whose parent company had run these schemes
Due to some administrative error, my team ended up receiving all the complaint letters
Virtually every one was either:

• I didn't understand what I had signed up to - I found that quite hard to believe given the amount of advice they had to take. From what I could gather, lots of these folks were is such desperate need for cash at the time, they would have sold their souls. Ironic really since that's what most of them felt they had actually done
• I need to move house because my current one is no longer suitable, but if I sell the house I have to pay back the loan and then won't have enough to buy another house. I understand that some schemes are more flexible nowadays

 

[Angilion]

A frankly bizarre response. The reason for the money will be the first thing a decent adviser will ask [..]

And I'm not an adviser. You're failing to understand despite how clear my responses are because you're proceeding from the assumption that I am, but I am not.