Right...
My mum and dad are retired, They have a house which they love and will not move. My mum has arthritis and my dad has a heart 'thing?' and
they spent all there spare time since 1976 on their boat. Because of old age they found the boat too much jumping on and off and doing the locks by
themselves etc but they still wat to enjoy life and are looking to raise some capital for a 2nd home somewhere.
They looked into that deal where you 'sell' part of your house to thieves..oh sorry i meant a company who will give you a lump sum for a
huge stake in the property. One would give them £31,000 but you would have to sign over 25% of your house in my parents case the house is worth about
£450,000. Bloody thieves!!!!
Is there another way to raise capital without paying money back monthly or paying huge amounts back to these thieves?
Equity release mortgages are a possibilty but the rate charged is higher than a typical mortgage and roles up depending on the term of the mortgage
(ie while they are both around). This will generally mean the sale of the property at a future date in order to repay the mortgage and so may not be
suitable for them which is why this sort of subject is always best discussed with a Financial Advisor specialising in this subject.
Have a look here for a bit more information but please urge them to
speak to a qualified advisor.
can you (or someone else in the family) afford to buy some of there house from them ?
Nope...sadly. Wish we could.
My parents are young at heart especially my mum.
Oh an no monthly payments either!!!
Good plan, keep it in the family and safe from the thieves.
The equity release mortgage mentioned above is the best way to not get ripped off DO NOT allow them to accept any sort of annuity deal your example of
"One would give them £31,000 but you would have to sign over 25% of your house in my parents case the house is worth about £450,000. Bloody
thieves!!!! " is one of the worst I've come across, but they are all absolute c*ap.
With the equity release thing make sure thay can stop drawing cash each month if they want to & be warned setup charges are quite high, but
it's still by far the best way outside of a "within the family" deal - which can, in itself cause all sorts of problems, not least with
the taxman, later on.
Also make sure they both have wills written so as to get double dose of inheritance allowance (first one to go leaves their half of the house in trust
for the kids) otherwise Alistair Darling will be helping himself to £100,000+ of their funds unnecessarily.
should add equity release mortgages dont have any payments to be made during your parents' lifetime - the original sum loaned plus the rolled up interest is paid at the end and the total depends on the term. The maximum amount that can be borrowed varies based on your parents age etc.
quote:
Originally posted by donut
They looked into that deal where you 'sell' part of your house to thieves..oh sorry i meant a company who will give you a lump sum for a huge stake in the property.
quote:
Originally posted by russbost
Also make sure they both have wills written so as to get double dose of inheritance allowance (first one to go leaves their half of the house in trust for the kids) otherwise Alistair Darling will be helping himself to £100,000+ of their funds unnecessarily.
I my opinion downsizing is the safest and only way to go , that way you are in control , i know bin there , moved from very big house in town to small
cottage in the country , peace and quiet at last plus lots of spare cash for my vehicles .
Mike
[Edited on 2/7/08 by miikae]
[Edited on 2/7/08 by miikae]
quote:
Originally posted by miikae
I my opinion downsizing is the safest and only way to go , that way you are in control , i know bin there , moved from very big house in town to small cottage in the country , peace and quiet at last plus of spare cash for my vehicles .
Mike
There are various schemes available such as:
Equity Release
Home Reversion Plans
Age Related Interest Only
Home Income Plan
To say that none of these are any good is wrong. The thing that anyone needs to do is see if their situation fits with what the scheme has to offer.
If it doesn't then it is wrong for you, if it does then use it like any other facility.
Mark.
PS - The IHT allowance now carries over to a surving spouse so you do not need to write complex will to do this anymore. With that said, there could
be advantages to using trusts with the monies rather than just passing them to a spouse, so again, you would need to speak to an advisor.
offering your parents £31,000 now for a future 25% stake in their house is not theft, it is just years of interest. It is a very poor way of raising
capital against an asset, but it just isn't theft.
Add 10% "interest" per year to that £31000 and in 14 years, you get £117k or 25% of the £450k that your house is currently worth. In 21
years, that figure rises to 50% of £450k. 10% being reasonable for such a long term investment with no get-out. The value of houses will probably go
up in that time, but houses owned by the elderly are usually light on maintenance and are rarely upgraded ref. wiring and plumbing. The £31,000 is
just a reflection on how long your parents are expected to live.
Perhaps a better bet would be to sell the £450k house, buy 2 £200k houses and spend the remainder on redecorating and renovation.
Sounds a little tricky to me, what about as an alternative looking into a "good" timeshare for the 2nd house or even trying to find a like-minded group of friends/family to buy together??
or a Holiday investment bond, for £10-15k a year they might get some nice holidays for the rest of their life and they can leave it to the family.
Again, need to take advice.
Mark
quote:I know it's not actual theft but you know what i mean.
It is a very poor way of raising capital against an asset, but it just isn't theft.
