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Bruce Banner

Help Our Children Get On The Property Ladder.

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'Help our children get onto the property ladder' via equity release. Probably no so bad - so long as said children helped onto the ladder don't expect to get the family house once the parents depart the Earth.

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'Help our children get onto the property ladder' via equity release. Probably no so bad - so long as said children helped onto the ladder don't expect to get the family house once the parents depart the Earth.

Anything that makes it possible for houses to be bought and sold at bubble prices is a bad thing, in my opinion. No sales, no bubble.

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That couple most likely have the choice of bypassing the children and helping the grandchildren.

It's a nice example of how high house prices enable the financial sector to extort wealth. You'll have about £80k equity release from the grandparents, which will then start compounding at 6%+ (transferring the asset wealth of the grandparents to others and removing it from the inheritance) and they'll get the grandchildren signed up for a 30 year 4.5x joint income mortgage just to get a belt and braces on things.

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Save your children & grandchildren from having to give a massive portion of their future wealth to the banksters, by giving a sizable chunk of your current wealth to them now.....er, no thanks.

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The Equity Release Council say that the average interest rate on these loans is 6.21%.

Amazing that they are allowed to advertise these loans (which is what they are) without a typical APR in the ad.

And without using the L-word in the ad!

Edited by Dorkins

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Amazing that they are allowed to advertise these loans (which is what they are) without a typical APR in the ad.

And without using the L-word in the ad!

I think the company being advertised are brokers, who take 1.7% if a deal goes through, and not lenders.

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I clicked this in the hope it was going to be parents moaning how expensive property was. Not an equity release scheme!

No no no. You're not getting it. High house prices is not the cause of our children's problems. Our owning too much of our own house is. We just need to dilute our own ownership, so we only own part of our home, and then they can own part of their own home, problem solved. And the really great thing is that the value of our house increases by 10% a year, but we're only paying 6% a year, so we'd still be making 4% a year even if we released all of our equity. What's that? Renting from the equity release company? Rubbish, we own our home and now so do our children, and like us, they will profit from the everlasting increase in home values.

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That's the thinking. With house prices going up 10% and the bank only paying 1% on deposits and your interest only refinancing being 6% you are quids in using equity release to raise funds rather than downsizing. Until you aren't.

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Funny funny, 'we now have a rainy day fund, to take that holiday we wanted for so long'. Yes, because that is what a rainy day fund is for! :rolleyes:

Wow. I guessed that was satire but watched the video to check. Wow. I also liked how the implication that a "much needed home improvement" was an old kitchen sink.

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Wow. I guessed that was satire but watched the video to check. Wow. I also liked how the implication that a "much needed home improvement" was an old kitchen sink.

No satire there my friend. I re-listened to the video to check my quote!

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The most worrying quote is "We used the money to pay off our Mortgage"... Did I really hear that. They are using an equity release product to pay off their Mortgage???

Unless I'm missing something and Equity release product essentially IS a Mortgage.... No?

Oh well fools and their money are easily parted!

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The most worrying quote is "We used the money to pay off our Mortgage"... Did I really hear that. They are using an equity release product to pay off their Mortgage???

Unless I'm missing something and Equity release product essentially IS a Mortgage.... No?

Oh well fools and their money are easily parted!

No. With equity release you don't pay another penny. So you save your monthly mortgage payment going forward. Sort of 0% interest only loan. Except it isn't.

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The most worrying quote is "We used the money to pay off our Mortgage"... Did I really hear that. They are using an equity release product to pay off their Mortgage???

Unless I'm missing something and Equity release product essentially IS a Mortgage.... No?

Oh well fools and their money are easily parted!

We borrowed money at 6% to pay off a loan at 3.5%.Compound interest lost on them.It a bit like student loans but for boomers.Sign this and the compound interest will ensure we take all your capital.

Its ironic they use it as helping children on the property ladder,when what it really does is ensure there is no inheritance to pay off their mortgage and/or retire themselves.You have to admit its a brilliant way to ensure capital isnt passed down the generations.Work forever you serfs.

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No. With equity release you don't pay another penny. So you save your monthly mortgage payment going forward. Sort of 0% interest only loan. Except it isn't.

So you're converting the equity in your house into an "annuity" that lets you live in the house, rent free, until you kick the bucket plus a tax free lump sum? I wonder who pays the upkeep.

Edited by Bruce Banner

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The most worrying quote is "We used the money to pay off our Mortgage"... Did I really hear that. They are using an equity release product to pay off their Mortgage???

Unless I'm missing something and Equity release product essentially IS a Mortgage.... No?

Oh well fools and their money are easily parted!

Of course one of the things going on here is people reach the end of an existing interest-only mortgage (for example one written in the early 1990s and backed by an endowment policy) and find there is a shortfall. They may be too old or may not have the income to make them eligible for a new mortgage.

In a situation like this an equity release product could be used.

My take on this is that the house has value because of earnings and prevailing credit conditions.

Where supply of physical housing is tight the existing owners can extract the value indicated by how much other younger people want that house in order to stay in that house.

I'd argue that if the credit product (equity release mortgages) were not available then the olds would have to sell the house that they'd never really been able to afford. As the olds would be essentially forced sellers they'd be taking prices rather than setting them and transactions like that might be expected to exert a downwards pressure on prices and facilitate large young families moving into larger houses and small old couples moving out of larger houses and into smaller houses, hence allocating a scarce resource to those people who need it rather than to those who got there first.

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All people need to understand is how regulation is set up to favour the banks and lenders is to look at how individuals are banned from creating a residential mortgage using their pension fund which they can then pay back.

As an example, I have £420k pension fund and a £390k mortgage.

Why not allow me to create a mortgage on my house for £390k using the funds from my pension . I'd then be paying myself interest (instead of the bank) and would get a better pension performance than most pensions funds whilst shaving off the need to pay fund management fees.

In short it would cost the banks and finance sector about 3.5% of £390k in interest and lost fees, which is why it isn't allowed.

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So you're converting the equity in your house into an "annuity" that lets you live in the house, rent free, until you kick the bucket plus a tax free lump sum? I wonder who pays the upkeep.

Might as well rent it out, innit.

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