General Chat

Is it a blessing ? or just another debt ?

Probably 'a good idea at the time'.

If you needed to sell at a later date, either to move into more suitable accommodation or a care facility, borrowers have often found that they received very little of the sale price.

It perhaps depends on what you need the money for.

eg
.I would see investment in education for a grandchild as a possible reason to release funds, but not for buying super luxuries.

.....but generally I would personally be wary.

I don't think you can say whether it's a blessing or a curse - it depends so much on individual circumstances. For me, it would be a last resort if I were desperate for cash.

My parents did this but they used a company that made sure that their children understood the consequences. My parents borrowed 40K where interest accrued at about 6% per annum with no repayments. I was happy with this because it meant they could enjoy their retirement together without worrying. They were struggling before they took out this loan and it removed a lot of worry.
Now the downside..when the house was finally sold the debt had increased to
110 K. over a period of about 12 years and the debt was climbing rapidly. The cost of the loan increases year on year as the interest accumulates. Most decent EQ companies will guarantee that that the cost of the loan will never exceed the valuation of the house at the point of sale in years to come.
There are other options available such as lifetime mortgages where you do make payments but the interest rate is far higher than a normal mortgage.
Hope this helps

I agree with you all. It took a lot years to pay off a mortgage and be otherwise debt free.

Debt down the years has been a stress, sometimes an excess of it. Now paid up.
The advertisement in the newspapers do look tempting.

My MIL had to sell her house to pay for her stay in a care home.

The fact she was able to sell her house, meant she could chose the type of Home she could be happy in. If you've no 'value' left, you have to accept what ever the care system is willing to fund.

There is a way around this re care homes. Firstly Social Services cannot take the value of the marital home into account if one spouse still resides there. Secondly if both spouses are tenants in common and their will passes their share onto someone else and not the spouse who requires a care home , it is very hard for SS to try to sell part of the property if the 50% other owner refuses to sell..I am just passing on information here ..so please do not judge

The fact she was able to sell her house, meant she could chose the type of Home she could be happy in. If you've no 'value' left, you have to accept what ever the care system is willing to fund.

Even if she is able to chose the type of home she could be happy with eventually her savings based on a mid priced property will run out.rapidly..she will be left with approx. 24k in savings and Social services will be looking for a far cheaper home for her to go to based on the contributions they are prepared to pay...

Very true Newby. However, there are different circumstances for different people. It's possible that a number of the elderly could live a long and contented life in care. It's true that their money may run out.
Others, like my parents, are placed in residential care when it becomes impossible for them to live safely at home. Their conditions led them to die within 6 months. The same would have applied if there'd have been some way to keep them in their home.

My Dad was in a Nursing Home for 3 years. The placement was made by SS after a huge stroke, as my Mum still lived in the marital home and they could not access that asset. When Dad was 90 SS decided that their funds were not enough and tried to make the family pay for the top up in fees to cover the increase in the homes prices. The home was fantastic and we were lucky
If we did not find the extra money they threatened to move him. I fought back...pointed out that they chose the home in the first place and the alternatives they now proposed could not deal with his medical needs. He had Vascular dementia and needed 24/7 nursing care. I also pointed out that for the past 3 years my Dad had been subsidised by the British Legion and USDAW and that this should not have been necessary because they chose the home based on their budget.. I fought for my Dad, a 90 year old vascular dementia patient and luckily I had a COP order allowing me to do this. They backed down PDQ but how many other relatives including elderly partners give in? ..

When I retired ten years ago I looked at a number of schemes purely out of interest.

Most offer some minimal comfort in that you will not ever be forced out of your home nor will there be any bill at the end of the day for your family but and a very big but, don't expect much to be left at the end of the day as it all comes at a big big cost.

Bottom line is if whatever you take out, after ten years the amount owed will have virtually doubled. Add in the extras, fees and guarantees I mentioned above then your £100k equity withdrawal could easily leave a big zero when you £500k house is eventually sold.

Inspector green pen has hit the nail on the head .. there are also fees to be met if you try to exit these agreements early .Please be very very careful before considering this and get independent advice XX

The decision to put MIL in a care home was the decision of my BIL & SIL
The reason being to sell the house (presumably so that she couldn't return to it.)?

The "care" was of such poor standard that two years later MIL died in hospital from dehydration and bed sores.

Not all care homes are bad xxx