Home Equity Release Schemes

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Home Equity Release Schemes

Post by Conveyancer » Sat Oct 29, 2005 10:12 pm

There are three important rules to remember about Home Equity Release Schemes:-

1. Avoid them at all costs.

2. Remember Rule 1.

3. Even if you really, really need the money - avoid them at all costs.

gardenlaw
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Post by gardenlaw » Sun Oct 30, 2005 11:21 am

A different point of view is often expressed by those who do decide to go down this route. You may or may not like these schemes and they will not suit everyone but try the point of view of the following people:

1 Elderly spinster with no family or dependants who is desperate to stay in her own home as long as she is able. The house needs repairs and she would like central heating and a few more creature comforts. Her house is worth £400,000 and IHT would bite.
Equity release, either with a lifetime tenancy, or a no negative equity guarantee would seem an option well worth considering.

2 A similar scenario for an elderly couple.

3 The children of the couple talk a scheme over with their parents. The children do not need the money. It would only add to their own IHT. The Inland Revenue might not accept a scheme whereby the children stand in the shoes of the Equity Release Company so this may not be an option even if the children wantd to commit money in this way. Apart from which it could place them in a difficult position in terms of family relationships.

There are as many circumstances as you can think of where people do take these on despite advice to the contrary. SHIP try to set up some form of regulation on a voluntary basis but the Government should bring them within the Financial Services Regulations. People do not realise that they are not protected to any degree other than within the particular contract they have.

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Post by Conveyancer » Sun Oct 30, 2005 3:04 pm

The main reason for expressing such a strong view was to start a debate!

The problem is that many elderly people are unable to sort the good schemes from the bad ones.

The firm I worked for had an offer to act for a company who would recommend clients who wanted to get into an equity release scheme. One of the conditions was that we did not advise the client on whether the scheme was good value or in their best interest! Needless to say we declined to have anything to do with them.

If you choose the wrong scheme you certainly won't need to worry about IHT as there won't be any assets left to tax!

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Post by gardenlaw » Sun Oct 30, 2005 5:36 pm

I am grateful for your having posted this topic

Certainly solicitors should not advise which schemes to recommend simply explain the consequences of signing up to the one they bring to you.

Age Concern have fact sheets on the subject. Of course they and Help the Aged back particular providers.
http://www.ageconcern.org.uk/AgeConcern ... on_794.htm

Try SHIP
http://www.ship-ltd.org/

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