This is a follow-up to my post “Equity Release Revisisted” which prompted me to look into the subject again and start a new series of blogs on the subject. I first wrote about this in 2012 and then again in 2015. (You can find my earlier posts by clicking on Equity Release in the TAG CLOUD).
I’ve been floundering around for the last few weeks looking for information about Equity Release on the internet. There’s plenty of it out there but it’s nearly all adverts by agents trying to get you to take out loans. They claim to be giving you independent advice but it surely has to be biased by the fact that they only get paid if they succeed in getting you to borrow money. I certainly wouldn’t call that independent !
They all seem to be reading from the same script. I think by now I could run a training course for Local Agents. It would go something like this (my scepticism are in italics):-
Learn the following and repeat after me :—
- Equity Release is the best thing since sliced bread.
- Of course, I am not here to sell you anything.
- There is no fee for my independent advice —– at least not yet.
- You can borrow a lot and you won’t have to pay back anything —– at least not yet.
- You don’t even have to pay interest on the loan —– that can be paid after you have gone.
- What’s not to like about that —– remember to keep smiling 🙂
- You can use the money to fulfil your dreams.
- Go on a holiday, give money to your grandchildren, spend it on things you could never afford before —— just make sure you tell them to live for 7 years or the taxman might have something to say about it.
- Or make you home more suitable with a stairlift or a wet room or maybe the conservatory you have always wanted.
- It sounds too good to be true, but why not enjoy your wealth while you can.
There are just a few other things before we can set you on course to the pot of gold at the end of the rainbow :-
- We will have to get your house valued for a small fee.
- Oh and you will need a solicitor to draw up the legal agreement to put a charge on your house, we know a friendly one.
- It can all be done in a few weeks if you just sign on the dotted line.
- Then the money will be all yours 😀😀😀😀
- By the way there will be a charge that the loan company will make, but that can be deducted from the loan so you don’t need to pay it.
- My small fee for all this helpful independent advice can be paid that way to.
One last thing you ought to mention …. interest rate. But, don’t make too much of this and explaining “compounding” might just confuse them —– don’t worry they probably won’t admit they don’t understand compound interest.
- There will be interest on the loan, but you can pay it at the end —– or should I say your end.
- It is a bit higher than a normal mortgage, but is a lot cheaper than credit cards.
- In fact it is only about 5% or 6%.
- Yes I know that is about double the mortgage rate, but we are taking all the risks and we won’t get any money back until you die —– or if we are lucky you move into a care home.
- And the best thing of all is we give you a No Negative Equity Guarantee. Which means you will never pay more than you house is worth —– even though by then we will have it all.
So now you have it all, go out a sell the happy life. And remember you get £1500 for every Equity Release Loan you sell !
This is the sort of patter you are likely to encounter if you enquire about Equity Release. It’s a hard sell wrapped-up in the cotton wool imagery of a luxurious lifestyle in later life. If you’re going to sell something which is not particularly good value for money to older people who probably have few alternative sources of additional finance, this may well be the option of a last resort.
BUT, that doesn’t mean that older people should be taken advantage of !