Equity Release

Can anyone help me with advice about  releasing equity from my Spanish home?

I'm 63, dept free, but would like to keep my property, rent it out, and live in a cheaper apartment bought with the money I can release.

Equity release is just a new way of saying remortgage ,have you considered selling. the house and buying two apartments try Google ( what is equity release ) .

If you have enough savings to provide a deposit in respect of the smaller property it would be an easier move to buy it with a mortgage, your idea requires a mortgage, as does mine. However if you don't have a deposit your idea is probably the only way to achieve your aim, best talk to a bank/mortgage broker. 

Can anyone help me with advice about  releasing equity from my Spanish home?

I'm 63, dept free, but would like to keep my property, rent it out, and live in a cheaper apartment bought with the money I can release.

I presume by this you do mean have your house valued and take the lenders valuation in cash to use as you wish.

First of as you know the lender will value your house quite low when it comes to handing over money, my stupid brother-law has just done this a couple of months ago, he has a bungalow valued on the open market at £200,000 plus, they lent him £50,000 payable back on his or hers death from the sale of the house, I am pretty sure he told me he cant repay any of the money back in the first year and then only a certain maximum amount each year after, if he wants to pay the loan up before death that is.

 IF he lives now for another 20 plus years, IF the loan runs the full term until death, IF he never pays anything back, the £50,000 will have risen to approximately about £120,000 or more to come out of the final sale, even if he pays some of the money back yearly he still stands to pay back about £80 to £90,000 for a loan of £50,000.

I have no idea if this is a good deal or bad one, on the face of it to me it's about as bad a deal as you can get,  I know the lender painted a very rosy picture of having the cash to do what you like with it.

You probably know all this anyway, and as you are now debt free, doing this you wont be, also you might have to put up with some shaftee little b*****d reminding you "You do know we own your house"

We recently divested ourselves of 4 properties, 3 rental apartments plus my late mother's bungalow, we are aged 68 and 69 respectively. We found managing let property in our 60's to be very stressful, tenants in arrears are normally in debt to everyone and sundry, with the power of the law being totally against the nasty 'Rachman' landlords. All of our properties were mortgage free, I can't even start to imagine what it would have been like if we had been hocked up in debt.

In all respect, I suggest that discovering entrepreneurial ambitions in your 60's is at least a decade too late.  

Renting out properties under 6/12 month AST's in the UK is very different to renting in Spain.  Not sure it's necessarily any easier though and may take more work and even more stress.

For me the OP's idea sounded a bit like a bit of a pipe dream.  Equity Release in the UK can suit eldely folk - but 63 is not considered that elderly and therefore the deal would not be too good.  But it may still may be worth considering.

In Spain BEWARE - I have seen deals offered that are potential nightmare situations - the mortgage rate is not fixed and therefore when rates increase, as they surely will, you could end up paying more for the mortgage than you are receiving from the annuity.  There are some that give guaranteed returns, but in Spain there is no regulation and personally I would never buy anything of this ilk in Spain - too many crooks and virtually zero consumer protection.

Equity release is not a mortgage, you take the money, loan, cash, what ever you wish to call it from the lender and never have to pay it back, no monthly payments, nothing, interest is added every year, final sum is paid back on house owners death or the house is sold while still living.

Equity release is a lifetime mortgage and is classified as such, however the op stated that he wished to release equity from his property, he never said anything about taking out an equity release mortgage.

Thanks everyone for your feedback.

i arranged equity release for my 79 year old mother in the UK.

She died at 86, I sold the property and paid off the "Life Mortgage".

Despite the interest acrude, it was all well worth it, as my mother was able to live as she wanted to.

I am surprised that there is no financial product available in Spain that will allow me to do the same for myself.

Baz1946, Hephaestus & Chris,

With respect you are all three are not quite right with your comments.  "Equity Release" products do exist in Spain but you need to be extremely wary as it means different things to different insurers and they may not spell out these to you.

I researched it in UK a few years ago in detail for a relative and at that time there were good products (I recall an insurer known as the Eccesiastical, had a "Home Owners Income Plan" which was fine and was finally accepted.  But I also had a quote through a broker from a household name insurer which was a package with an annuity backed by a mortgage.   The annuity payment received was fixed as you would expect, but the mortgage was not, with the obvious potential consequences.

This practice has long since been outlawed in the UK by the FSA (now the FCA), but these products exist in Spain and extreme caution is required to ensure that you are buying what you think you are.  You need to know the detail and obviously the mortgage element should be at a fixed rate for the duration.  You cannot take anything for granted in Spain.

acer,

With equal respect, just conduct a Google search under 'Equity Release', you will find a virtual plethora of UK providers, even the likes of Saga are in on the act. 

Yes, Acer I quite accept that I should have perhaps worded it a bit more fully or openly.

As I said it can be called anything anyone cares to but it is in no way a Mortgage in the true sense of the word, like some have taken out to buy a home with, as we all know with a Mortgage you pay a deposit, you agree the monthly / yearly terms, you pay back these regular payments, miss three monthly payments and you will probably get a nice reminder from the lender, keep on missing payments and as we know stand the chance of losing your home.

With these equity release setups, or not so commonly known Life Mortgages, you don't have to stump up a deposit, you don't have to pay any monthly payments, you cannot miss any payments, you cant lose your home, most have a minimum age before taken out, they have no term length, and also with some you cant pay back anything in the first year, if someone can compare all this to a "Mortgage" on a house then so be it.

One of my Daughters owns an Estate Agency and Letting Agency, she employs an ex Solicitor solely to deal with mortgage and equity release  applications, I asked her how she describes them, these are her words..."I never ever call them "Life Mortgages" because that gives a false sense about the loan to the client, I tell the client they are "Releasing Equity" in the house to use as they wish, I know they have been known as that, but legally we don't like to describe them in such a way" and so on.

These schemes are being marketed in the main by banks and insurance companies via brokers, well I supposue that following the 'Pension Transfer' and 'Endowment Mortgage' scandals, along with the banking meltdown that the've got to find something to sell. After all the regulator only passes the blame onto the intermediary who has given the advice, they never actually ban the marketing of such schemes, or punish the providers, so why not carry on trading via brokers?

The Saga Equity Release Plan is trusted because it has the word Saga in it's title, little do the majority know that the scheme is actually underwritten by Just Retirement Solutions Limited, not that I'm inferring that there is anything wrong with the latter, other than them not being called Saga. Now if you're really desparate you could opt for a Wonga Payday Loan, that has a typical APR of 5853%, these guys make the Equity Release providers look like Mother Theresa.