donut
|
| posted on 2/7/08 at 12:19 PM |
|
|
Raising money from your equity
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?
Andy
When I die, I want to go peacefully like my Grandfather did, in his sleep -- not screaming, like the passengers in his car.
http://www.flickr.com/photos/andywest1/
|
|
|
|
|
Paul TigerB6
|
| posted on 2/7/08 at 12:30 PM |
|
|
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.
|
|
|
mcerd1
|
| posted on 2/7/08 at 12:32 PM |
|
|
can you (or someone else in the family) afford to buy some of there house from them ?
|
|
|
donut
|
| posted on 2/7/08 at 12:37 PM |
|
|
Nope...sadly. Wish we could.
My parents are young at heart especially my mum.
Oh an no monthly payments either!!!
Andy
When I die, I want to go peacefully like my Grandfather did, in his sleep -- not screaming, like the passengers in his car.
http://www.flickr.com/photos/andywest1/
|
|
|
simoto
|
| posted on 2/7/08 at 12:38 PM |
|
|
Good plan, keep it in the family and safe from the thieves.
striker/blade now complete, thanks to all on this site.
|
|
|
russbost
|
| posted on 2/7/08 at 12:42 PM |
|
|
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.
I no longer run Furore Products or Furore Cars Ltd, but would still highly recommend them for Acewell dashes, projector headlights, dominator
headlights, indicators, mirrors etc, best prices in the UK! Take a look at http://www.furoreproducts.co.uk/ or find more parts on Ebay, user names
furoreltd & furoreproducts, discounts available for LCB users.
Don't forget Stainless Steel Braided brake hoses, made to your exact requirements in any of around 16 colours.
http://shop.ebay.co.uk/furoreproducts/m.html?_dmd=1&_ipg=50&_sop=12&_rdc=1
|
NOTE:This user is registered as a LocostBuilders trader and may offer commercial services to other users
|
Paul TigerB6
|
| posted on 2/7/08 at 12:43 PM |
|
|
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.
|
|
|
mcerd1
|
| posted on 2/7/08 at 12:53 PM |
|
|
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.
don't forget the interest that accumulates on some of these deals 
one time I went to see my solicitor was just as he was finishing with an old couple that had got the equity release idea stuck in there heads
he was trying to get them to do anything but not the equity release thieves (#1 on the list was selling to family, #2 was downsizing) - in the end I
think he just refused to setup the deal for them
[Edited on 2/7/08 by mcerd1]
|
|
|
Paul TigerB6
|
| posted on 2/7/08 at 01:00 PM |
|
|
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.
Absolutely as Russ says. With a house worth £450,000+ there is a potential IHT liabilty of £55k ish from the house alone at present if no Inheritance
Tax planning is in place. If your parents decide to go with this route then its the perfect time to look at their whole financial planning situation
to keep Mr Darling's mitts off
[Edited on 2/7/08 by Paul TigerB6]
|
|
|
miikae
|
| posted on 2/7/08 at 01:01 PM |
|
|
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]
If it can be done it i will be done .
|
|
|
simoto
|
| posted on 2/7/08 at 01:05 PM |
|
|
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
You lucky bar stool.
striker/blade now complete, thanks to all on this site.
|
|
|
Tiger Super Six
|
| posted on 2/7/08 at 01:08 PM |
|
|
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.
Mark
Tiger Avon
|
|
|
smart51
|
| posted on 2/7/08 at 01:24 PM |
|
|
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.
|
|
|
eznfrank
|
| posted on 2/7/08 at 01:32 PM |
|
|
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??
|
|
|
Tiger Super Six
|
| posted on 2/7/08 at 01:39 PM |
|
|
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
Mark
Tiger Avon
|
|
|
donut
|
| posted on 2/7/08 at 02:26 PM |
|
|
quote:
It is a very poor way of raising capital against an asset, but it just isn't theft.
I know it's not actual theft but you know what i mean.
Thanks lads. I have phoned our finantial advisor and am waiting for a call back.
I'll buy a lottery ticket this week, you never know!! 
Andy
When I die, I want to go peacefully like my Grandfather did, in his sleep -- not screaming, like the passengers in his car.
http://www.flickr.com/photos/andywest1/
|
|
|
