Home Equity Release abroad

B

B. Bub

Registered User
Messages
17
Can anyone answer my query or at least point me in the right direction?

I'm trying to find out what different types of home equity release are available elsewhere for older people.

It seems the options here are quite limited and tend to be expensive; being either a loan for life with no repayments where the interest just keeps building or to sell a chunk of your house for far less than it's worth.

In the likes of the UK and USA are there alternatives for older people? If so what are they or where is the best place to find information on it?

Any help would be appreceiated.

Bub.
 
'Moneyfacts' is the bible for UK products.
Essentially you have described them. One being rolled up fixed interest; and the other being a sale of a portion. A third would be where a lender is prepared to give a repayment loan regardless of age. (eg Kensington). The rate is generally 2-3% over base.
 
As far as I know there are only two dedicated equity release products for older people on the Irish Market: SHIP and [broken link removed]. Bear in mind that some commetators have criticised such products for their high charges and other side effects. include some critical comments. There may be better (more cost effective) ways to release equity such as having children buy out parents in part or full, trading down and pocketing the CGT free gain etc. Use the search facility available in the navigation bar near the top of the page to search for terms such as "equity release", "SHIP", "LifeLoan" etc. for more comments from previous topics.
 
Significantly the BoI Lifeloan is such that if house price inflation is at least 4% per annum (it was 10% compound since 1970) then if the extraction is 30%, in a 15 year period with the rolled up interest ..the pecentage is still 30%. Also crucially, it is time based so if the customer dies in a 5 year period then the interest is for five years.. end of story.. and no 'fixed rate' penalty.

The BoI do not share in any of the uplift and that is the position.

The clear downside is if house price inflation is lower than that or negative.

If the SHIP product is looked at the issue is that the 'today' value of the portion they buy (say worth €100,000) is not what they give the seller. But a percentage. Currently about 47% at age 70. So that would be €47,000. The obvious issue is their share is their share regardless of whether the seller lives for one year or fifty years. And as far as I know there is no 'clawback' to the estate if the seller dies in a relatively short period. In effect this would be 100% 'intersest' in 5 years if the property price did not move at all.

They then 'own' their share and if the value of the house goes up by 50% then their portion is worth €150,000, which is what is paid back. Meanwhile if you took the €47,000 .. it would be a considerable length of time to come near that ..about 17 years.

It is of course true to say that a family arrangement or 'trading down' is financially better. Older people do not want to move. If you are on the state pension, then you survive but dont live really.
 
Thanks for the replies.

It is because of the very bad value of these two models that I was prompted to post my query. You mentioned Kensignton lending to older people despite their age at 2-3% above the base rate. Where might I find information on this?

Is this the only atlertantive to the life loan or SHIP models in other jurisdictions?

Bub.
 
You must log in or register to reply here.
Back
Top