The truth about equity release. Using your home for retirement income
Vložit
- čas přidán 24. 06. 2024
- You might have heard people say “My home is my pension” or maybe you’re in this position yourself. This is because for many people approaching retirement their house is their largest asset.
But relying on your own home to provide a retirement income may not be as simple as it sounds.
In this video, I’ll go through all the factors that you need to consider.
If you're thinking about if financial coaching could be right for you, then why not book a free 30 minute slot with me in the link below?
diannesullivan.co
Timestamps
0:00 intro
0:33 home equity & pension savings
1:31 we become attached to our homes
3:15 is there another way to get value from your home?
3:38 the different types of equity release
4:47 how much equity can you access?
7:07 how to decide if equity is right for you
The thought of still being "in hock" during retirement is all the incentive I need to make sure I knuckle down and get that money saved and invested! 😱😱
I did as my wise old Dad advised when I was in my 20s and invested in a private pension and a works pension. Maxwell took the works pension but with compensation I now get the princely sum of £62.35 a month, which because of the static allowances I now pay, with the other pension, £50 a month in tax. So the Maxwell family are living the highlife and I'm managing on 21,500 a year when I should be comfortably off and not worrying about fuel crises etc. Taxing what I've already earned is immoral and should be stopped! I wonder why I bothered saving anything at all in the first place when I could have been better off keeping what I had to myself!
Your Dad was only giving the best advice when
rich people had a code of conduct, broken (first?) by Maxwell and now increasingly non-existant.
My late Dad, a railwayman, told me NOT to rely on pensions because they wouldn't exist by the time I reached pension age. He was sort of right, with the pension age for many drifting off into the distant future, bit by bit. I'm truly sorry for your plight. At least one of the Maxwells is in jail, but not for stealing your pension 🤬.
It's easy to be wise after the fact but property would have been a better investment. People need a roof and you can manage them yourself when you buy not too far away from where you live.
Parking spaces and garages are the best investment where we live but we realised too late 🤔.
Nowadays in France there are inexpensive insurances against non-payment of rent.
Really clear and concise.
Glad it was helpful!
This is why my wife and I (who started with nothing, no lottery win, no inheritances - we're 62 🇨🇵) have 8 houses and apartments (70,000€ remaining to pay on these rental properties).
We'll be selling our current primary residence in 2026 to generate a 350,000€ pension pot, and move back to the "double house" our two children (in their 30s) grew up in.
Each child will receive a donation of the nu propriété of one unit of the double house where they grew up in 2027 and we will keep the usufruit, and rent out one of the furnished units in summer, the other becoming our primary residence again ⛱️🌞.
When we've spent the pension pot, we'll sell our 5 unfurnished rental units for 250,000€ to generate another one.
It's a proper plan that we've had for a long time and keep reviewing.
I'm already drawing a 537€ pension from 3 sources in France and my wife will have +/- 1500€ from 2027.
Then it's GO-GO, SLOW-GO and NO-GO.
Very good informative video. It's NEVER too early to start planning. We look forward to the next one 🎉+1.
Tax man will have a field day when you sell .
@@gillianmillington7735 No he won't. No capital gains tax on primary residence in France, same as UK.
Then part of secondary residence becomes our primary residence.
You don't think we're so daft as to set ourselves up like that, do you? 👍
The unfurnished units haven't really gained much in value over 18 years (we bought at the top of the market so the increase in price will be minimal, and capital gains tax [33%] minimal too) but bring in a good rental income. We'll try and sell them when we get infirm.
Thanks for asking the supplementary question 👍.
The only tax burden will be that we'll pay a small portion (12,500€ total) of the death duties "in advance" when we donate our furnished properties worth 600k€ total, one each to our children, exonerating them from any death duties.
@@gillianmillington7735 Of course, there's a downside to setting yourself up for retirement.
a) you can't spend freely when you're young, but you can have the odd "extreme" treat.
b) you might die or become infirm before you get to "cash-in day".
Nearly everyone I know has p*ssed it up the wall 🤔 and is looking forward to a middling or poor retirement.
Very informative video, thank you! Quick question, are the percentages you can borrow at 55, 65 and 75 estimates or fixed by regulators? Wouldnt there be competitive offers from different lenders? Also are these based on lump sum loans? I assume the difference between this and normal loans is the provider no payment of interest until death or property sale and if you live a long time the interest accrued still can't exceed the equity? Thanks.
Step Change offer free Equity Release services unlike others that charge thousands
Diana in your opinion should we be worried about the Dow, Nasdaq and S&P all being at the 4.236 extension as the last time this was the case was 1929 just before the Great Depression for those who have pensions invested in stocks it will be devastating sure some who have a long time left for their pensions to run I understand they could take the view in the long term the markets will recover from a crash but why would you surely get out of stocks now get into fixed interest and cash and wait for the stock market to crash the indicators and history are strongly pointing to this upcoming crash but no one talks about this at all, I don’t understand the charts show so clearly?? Could you do a video about protecting your self from a stock market crash please. And thank you for your videos their great👍
Good question. I would like to see an answer to this too.
Hi Andrew , I'd like to address your question - certainly the S&P 500 is screaming significantly over valued & if you are edging towards retirement & looking to withdraw funds then I can understand your concern & you are looking for an answer , you mentioned the 1929 crash which took investors 25 years to fully recover their money - we do not know in advance whether or not 2024 will be the year that the market will crash - the market could continue to go higher even at these elevated levels , I'm also not a financial advisor & I do not know your personal circumstances. Ok let's take a look at a possible strategy .. what we do know is it's a 50/50 chance of the markets continuing to go higher or of it going lower - one possible solution could be to sell half of your stock portfolio & as interest rates are at reasonable levels you can probably earn 3 to 4 % by holding that portion in cash , what you can then do is divide that money up - say between 25 months , so if you had £100,000 ... £50,000 would remain in the stock market fully invested & the other £50,000 would be re-invested at £2,000 per month .. that way you are covered both ways - if the stock market goes up you benefit & if the stock market goes down you can benefit , now if the stock market continues to go up to even more crazy levels - you can simply repeat the same exercise - so if in 6 months time it's even higher - again sell of what you need to - to get it back to 50 % invested & 50 % cash & just start the process again.
@@Zurrian-ym5xo Thank-you for your considered answer, I know what your saying but the right thing is different for everyone and me being close to retirement now(4/5 years)I want to be out of stocks I would hate a 40% 50% loss or more which is very possible with the current price and past history add to that a strong gold price and fed cuts(Yes Fed cuts I’m in a minority but fed cuts are not positive for the markets history shows this maybe a small surge of the first cut but that’s it to me fed cut = Run for the hills, Strange how so many say fed cuts are good for the market when history clearly shows they are not) coming I want out completely I’m now in fixed interest and cash.
I don't think you can talk about equity release without mentioning that borrowing 75% of a 300,000 value home could incur a huge debt which could surpass the value of your property within four years. Probably better to sell and then rent.
In France they have "viager". You sell your property and stay in it and get paid by the new owner at a low rent. Once you die, they get a property that they have bought at a discount. Unless you're Jeanne Calment. She outlived the "Solicitor" who bought her house by about 30 years. I guess that serves him right.
Any money you release means the Government/Council will never get their hands on it should you need long term care
Work all your life and give it away to these robbers what a load of bollocks
Work all your life and give it away to these robbers what a load of bollocks
Work all your life and give it away to these robbers what a load of bollock