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spyguy

Bolt From The Blue .... Equity Release - Merged Topics

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OAP.

Financial Advisor.

Equity release.

What could go wrong?

Nothing unusual or unexpected about the outcome.

Just the 'poor me, I cant do maths or plan much'.

http://www.dailymail.co.uk/money/mortgageshome/article-3254070/Thinking-taking-equity-release-Meet-retired-couple-pay-Aviva-135-000-spend-years-together.html

'Not only this, but the £42,900 they had originally borrowed had ballooned to £119,391 since 2003 because of the crippling effect of compound interest charges. '


'

Roy and Jean, now both 83, had released cash from the equity in their home because they wanted to buy a boat to enjoy in their retirement.

They had lived in the same maisonette for more than a decade, and had seen its value soar from £75,000 when they bought it 11 years earlier to £120,000.'

OK, they bought their flat in 1994ish - hardly the family home.
The prie of the flat has probably gone up with prices 75 -> 120 - although the second is debatable as they did not sell.
They borrow 43K at the age of ~70. They spend it on a boat FFS! At 70!!!!!
Idiots.

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'Seven years ago, Sheila Palmer was struggling to survive on a small pension. So the 86-year-old widow, from Radcliffe-on-Trent, Nottinghamshire, took out a £38,000 equity-release loan from Aviva, at a fixed interest rate of 6.89 per cent.

Her one-bedroom flat — one of eight in an upmarket residential building aimed at the over-50s — was then worth around £64,000.

She used some of the cash to buy a car, so she could visit friends and do the shopping.

But when she opened her annual update from Aviva last week, she burst into tears. For her £38,000 loan has become £65,608. While Sheila had understood the debt would grow, she had no idea to what extent.

And now the unexpected burden has left her fearful for her finances and triggered a huge rift with her family, who have effectively seen their inheritance wiped out.

Sheila, a former nurse, says: ‘No one told me I should talk to my family, no one told me about the terrifying size of the debt and no one told me about the compound interest.'

A car!! At 86!!! Was it a Porsche?

You start at 38k. You add 6.89% to the debt. Then you repeat each year.


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So the accounts manager wants to complain for something they freely entered into, splurging on a boat, from magic free equity. It's the wider Breakdown (no one is to blame for any market decision they take) attitude for the biggest winners and chancers that allows these 'stories' to appear, and keeps everyone else priced out imo.

'In 2003, they saw a financial adviser and borrowed £42,900 as an equity-release loan, at 7.1 per cent, from insurer Aviva. They bought a 29ft Rodman motor cruiser and christened it Rob Roy. In 2008, they sold the boat — and, later that year, moved house, taking the equity-release loan with them.

frankieg, stevenage, United Kingdom, 5 hours ago
The terms were all there and they were pretty bad but the couple wanted money for a boat so they agreed to the terms , No one made them take the money so i cant see what they expect the company to do. i am afraid greed lead them to accepting something they now regret but they did it so really what do they expect .
-
Spending money made from the "thin air" increase in housing values is not spending money you have worked hard for. Those ever-increasing house prices mean their children may never afford to own a house, let alone have the mythical equity to access in their own retirement.

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....homes should not be used as a cash machine, the increase in value was not worked for it was a given, right place right time....not surprising that others wish to capitalise from that HPI........don't know what they are complaining about, they got something for nothing they had good use of free of charge, they can't take it with them.....nobody forces anyone into spending equity, they are fortunate they have some.....millions don't.

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Just more people on the end of the debt racket, a racket promoted above all else by the government and central bank. Enriching a few and destroying the productive capacity of the country by twisting and distorting it to best favour those with the means to create the debt with which to carve up and decimate the finances of others, destroying the life chances of generations - both in work and family terms.

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Take note, FTB generation. These are the sort of people who are telling you that you can't go wrong with bricks and mortar.

I remember the unencumbered joy during the early 2000s when horse prices went mental under Brown and all the idiots started celebrating by borrowing equity loans against their houses. How clever they were they said. How my concerns were drowned out and trodden on. Utter utter scum. If they were on fire I'd warm my hands.

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The good news is that they might lose interest in pumping house prices if all their equity has gone. Exactly how an insurance company values an asset which grows at 6% then abruptly stops is interesting to ponder.

All a bit grubby, relatives falling out over a few tens of thousand quid. Absolutely naff all in the grand scheme of things. Not saying it would be justified if the sums were higher mind.

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They ultimate aim has to be debt from cradle to grave. They just need to plug the early years gap by enabling FTBs to borrow against the future income of a newly born.

Then a 50 or 60 year mortgage so people pay lots more than the value of the house in mortgage interest. Then equity release before the mortgage ends, so they also pay more than the house is worth in interest on that loan. Net result when they die they leave no house to inherit, so the next generation are given nothing to pay their debts off with.

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There is a picture of an old couple for goodness sake. Surely that means the big bad company is wrong and the little poor pensioners are right. You can't plan for everything, how were they to know the debt goes up or that they would get older...these are just unknowns and they were unlucky. ?

I think pictures of them on the boat for many years and laughing at how clever they are might help some balance to the story. Perhaps some snippets of them gloating over their stupid 'non boat owning' neighbours at a dinner party too. ⛵️

I am still confused....if I borrow money with no repayments....does the balance of my debt go up or down? FFS.

Sure they will get something back. No one at Aviva will really care....it's not from their pockets in the end. Shareholders and other customers pay. Bit like PPI and endowments. ?

Still, sold a few extra copies of the newspaper - which at the end of the day is the ONLY purpose of every piece of print nowadays.

Fingers crossed they may win the Nigerian Lottery next week and everything will be sorted.

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I remember the unencumbered joy during the early 2000s when horse prices went mental under Brown and all the idiots started celebrating by borrowing equity loans against their houses. How clever they were they said. How my concerns were drowned out and trodden on. Utter utter scum. If they were on fire I'd warm my hands.

Ah, those halcyon days! Super intelligent and trustworthy Carol Vorderman, appearing on your telly at night, telling you how you could consolidate this loan and that and loan, have a lower monthly payment and STILL have enough "left over" for a new car, dream holiday or conservatory!

Must have been smart, 'cos Carol wouldn't ****** you over for a few quid of advertising money, now would she?

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No problem. The latest TV ads (on Sky) are saying that if you've ever lost money following the advice of anyone, they will get you compensation, bailouts are now the norm.

There probably are some legit cases of mis advice. Plenty aren't of course. And advisors should be on the hook too.

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No problem. The latest TV ads (on Sky) are saying that if you've ever lost money following the advice of anyone, they will get you compensation, bailouts are now the norm.

Are thousands of people going to be suing (sueing?) Carol Vordermann, then?

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Maybe some hpcers can donate to them out their own pockets, with house prices at new peaks in many an area.

I read a hpcer claim a BTLer was a future victim of the British education system too.

Don't we all want stuff today, including for many of us a house, but some of us limit our spending and save. Or some choose to buy at lower end of the market, where so many 'victims' bought at the nicer end via mega debt, and their backers eager to blame on the renter-savers/society.

Debtors can otherwise repay (sometimes restructure) or default with consequences. :) Welcome to the real world.

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One of the problems was the new 'language' of the Banks,

Second Mortgage didn't sound too good, so it became the far nicer 'Release some Equity'

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Mail gets to fill a page about equity release (yet again over the years) and tries to make it sound like it's a fresh problem that will be sorted out for future people who want to do the same in future. Until the next time.

People who think their home is their pension suddenly realise it's not a very good value pension.

This article also ties in with the recent FCA statement that too many people are staying in their big houses after they retire.


http://

www.dailymail.co.uk/news/article-3239243/Anger-financial-watchdog-tells-elderly-downsize-tackle-housing-shortage.html

Edited by billybong

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For her £38,000 loan has become £65,608. While Sheila had understood the debt would grow, she had no idea to what extent.

Sheila, a former nurse, says: ‘No one told me I should talk to my family, no one told me about the terrifying size of the debt and no one told me about the compound interest.'

From my experience, most people cannot work out percentages, especially if you put a decimal point in there, let alone the maths involved in compound interest.

This statement is 1 / (1.0689% ** 12) accurate and should not be used as the basis of applying for debt.

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Guest eight

Why is everybody so critical? Some apprentice joiner at a boatyard somewhere was probably kept on for another month due to this pair's generosity.

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use the boat for a viking funeral, maybe wait till another flood due to building on flood plains then set it adrift with there burning corpses through flooded barrat homes.

Is it just me are people unusually concerned with inheritance? Its just something i never though of I prefer to think of the person than my future cash gains when they croak.

People are such a bunch of c**ts.

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One of the problems was the new 'language' of the Banks,

Second Mortgage didn't sound too good, so it became the far nicer 'Release some Equity'

Problems for who? I sure haven't got a house with any equity in it. These house prices. If I did have a house I would want to pay it off. People on HPC seem to think others are innocent for massive lump sums for boats and cars to appear from their homes, for free.

Also equity release companies take a risk too, if/when prices don't rise or the releaser lives a very long life.

Having people in debt means that eventually some might need to sell at lower prices. Not an excuse fest to stop that and stop hpc, please.

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