How Do I Release Equity From My House?

‘How do I release equity from my house’ is a question regularly asked of Advice Guru.

This Podcast episode is from the hugely successful Advice Guru Podcast: Later Life Lending (sponsored by Royal London Equity Release).

In this episode, Stuart Powell and Nicola Palmer discuss with Bob and Jane how they used Equity Release to purchase a property in the UK, having been living abroad for several years.

Audio version of the Podcast

Transcript of the Podcast

Introduction to Bob and Jane

Stuart Powell: Welcome to our latest podcast. In this podcast, we’re going to be having a chat with Bob, bob and Jane. Bob and Jane, earlier on this year, decided to research lifetime mortgages and actually took out lifetime mortgage. So it’s great to have them here. What we are going to do is ask them some questions about their experience, their journey, what they went through, what they liked, what they didn’t like. Hopefully that will help those of you out there who are considering potentially taking out a lifetime mortgage. So. Hello, Bob. And hello, Jane.

Bob: Hello, Stuart. Hello, Nick.

Nicola Palmer: Hi, Bob. Hi, Jane. Thanks ever so much for joining us today.

Bob: Pleasure.

Nicola Palmer: So, as Stuart said, we are going to just ask some questions just to really help people that are perhaps in the position that you were in a few months ago and just to see if we can get some answers to how you go through the process.

Jane: How.

Nicola Palmer: You found an advisor, the legal process, that type of thing. So I think we just want to go through and just ask you a little bit, a few questions. We can then get a bit of background to start with and then you can talk to us about how you found the process and just give a feel of how it worked for you.

Bob: Yes, that’s fine.

Why Move Back From France?

Nicola Palmer: Good. So I understand that you were living in France and you wanted to move back to the UK, is that correct?

Bob: Yes, I hesitated for a moment because we loved it in France, but for a number of reasons we decided we needed to come back and, well, as you know, we’ve actually done it, so, yes, that’s true, what you say, what you asked.

Nicola Palmer: Wonderful. Would you be happy to tell me the reasons that you needed to come back?

Bob: Yes, there’s actually quite a few. I’ve got a few health issues myself with mobility and we had a lovely big house with a lovely big garden, which, to be quite truthful, was just a bit too much for us after nearly 20 years in France. We always had a lot of land and so on, but as age catches up with you, inevitably you have to be a bit more realistic about what you can manage.

And also, our youngest daughter lives in Droutwich sorry, in Hartlebree, a few miles away from us. She has two little boys, three and 18 months. Three years and 18 months. And a little baby just arrived a couple of months ago. So we came back, really to try and make ourselves useful, but from a personal point of view, just to get to know those three little new people. Greg’s yes, and our son then announced he was having a baby through with using his partner as well. Sorry, that sounds awful, but his partner and he were having a baby as.

Stuart Powell: Well in the next two weeks, I think.

Nicola Palmer: Yes. So it was really, as you say mobility problems, but also to be closer to your family and your grandchildren and new grandchildren as well.

Bob: Yes.

Jane: The sad thing is we had to leave three grandchildren in France. They’re growing up very fast, so they can come over and see us fly over. They’re old enough to do that.

Nicola Palmer: Brilliant. So you had a property that you owned in France?

Bob: Yes.

Nicola Palmer: So you made the decision to move back, and in terms of location, were you looking to move closer to your youngest daughter, did you say?

Bob: Yes, we wanted to be within perhaps up to half an hour journey away. Not too close to be in their pockets or to feel that we were smothering them, but close enough to be available if there was an emergency or for babysitting or all the stuff that we’re actually doing at the moment.

Nicola Palmer: Oh, yes, I remember it well. Needed my dad to help with my son when I was working and life very isn’t it?

Bob: Exactly.

Nicola Palmer: That lovely to have. I’m sure she loves having you so close.

Bob: Yeah, it’s superb. It really is very nice.

Jane: I mean, we were there for our other grandchildren when they were growing up in France, but they’re sort of 1012 to 13 now, so they don’t really need.

Nicola Palmer: So before you thought of taking out an equity release in a lifetime mortgage, what other thoughts did you have? Did you think of any other ways that you could afford to move back to the UK?

When did the question ‘How do I release equity from my house’ arise

Bob: Yes, obviously we had the proceeds from the sale of our property in France, but we’d soon discover that it wasn’t enough to get anything like the property that we needed to have in the UK. Because there’s such a wide differential between the house prices in France or the part of France we were in and in the UK. So that we realized we needed a top up of some sort. Now we’re in a position of having two flats in Doncaster which we used to top up our income.

So basically, we had an option there of either going down the mortgage route and using the flats to fund the mortgage repayments or to sell the flats and use those, basically to add to the proceeds from our sale of our house in France and buy this place outright. And in the end thought about it and decided that we would look into the whole idea of a mortgage and then realized, of course, that at our age, the only sort of mortgage that’s really applicable to us is an equity release. And our daughter and son in France had dealt with a mortgage broker because they’re in the property rental business in the UK as well. But he said he couldn’t do it, but he knew a man who could. And this is where Stuart came on the scene.

Nicola Palmer: Your daughter had recommended a mortgage advisor. You went and spoke to them?

Bob: Yes.

Nicola Palmer: And then they said they couldn’t help with the equity release, but they knew that they could refer across to Stewart.

Bob: Exactly.

Nicola Palmer: Wonderful.

Stuart Powell: That was James Miles.

Bob: Yes, James. I can’t even remember what company it.

Stuart Powell: Is, stewart, but exeter Company, but a good group of people who understand what they can do for clients, how they can help them. But they’ve learned about lifetime mortgages as well, so if they can’t help, they know a man who can.

Nicola Palmer: Fantastic. So, as you were in France, how did the process work for you to talk to Stewart? So you couldn’t come into the office to see him?

Bob: No, he refused to let us in, to be serious. It was just a case of picking up the phone and then sending emails back and forth to each other. We didn’t actually do any zooms or anything like that. Everything was handled really quite smoothly on the phone and by email.

Nicola Palmer: Fantastic. And your children were all involved in the process. How much involvement did they have?

Bob: I think because it was a major moving shift in our lives, that we kept them involved right the way down the line. And had they felt that it was going to be a problem or that we were going that it was wrong for us to consider a mortgage? Because, to be quite honest, the last thing I wanted was a mortgage at 72 years old, I’ve been converted. But nonetheless, the kids had said, no, this is wrong for you, we would have listened to them. So, yes, they were involved, all three of them? All three of them.

Nicola Palmer: And they were quite happy with the decision that you finally made?

Bob: Yes, they were. They were keener than we were, I think.

Nicola Palmer: Another thing, another point that’s just come up from what you’ve said there, Bob, was you didn’t want to take out a mortgage. I think when you take out a mortgage, your whole plan is to pay off as soon as you can, and feeling of being able to be mortgage free is such a nice thing. And it is a completely different mindset, isn’t it, when you think, actually, at my age, at 72, I think you said you were then think, I’m going to take another mortgage out, but did you find that challenging?

Had you ever needed to ask, ‘How do I release equity from my home?’ before?

Bob: This is our 7th house. I think, as the tradition goes, that people have seven houses and we’ve always had mortgages. We’re used to the whole concept of mortgages, we’ve always had repayment mortgages, so we’ve spent most of our time trying to pay them off as quickly as possible. So you’re quite right that the mindset of having a lifetime mortgage is a bit daunting, I think. And you have to think about, well, am I lumbering the kids with something after the event, or something like that? Or lumbering Jane with something if I pass or she passes, and so on. So, yes, there was a lot of heavy thinking about it beforehand and I think Stewart and the gang were very good in sort of answering basically fairly blunt questions about the whole process. So that was very reassuring.

I have to tell you, if you can edit this bit out, but the last mortgage we had in the UK before we moved to France in 2003 was a straight repayment mortgage with Abbey National. And just before we moved, we sold our house there. I went into Abbey National with my checkbook and I paid off the mortgage. There was only about 10,000 or something left on it and there was a round of applause because I don’t think it happens very often. People, I’m going to pay my mortgage off. Here you are, let’s get it done. And I think that really fired me up, never to have a mortgage again as well, anyway. But to be serious, it was a means to an end and we did give it a lot of thought, the whole family did, and it’s worked out okay so far.

Nicola Palmer: Fantastic. And obviously there’s lots of different products on the market, lots of different rates, different options that are available to you, obviously. Stewart went through all of those with you. Was there anything specifically specific that you were looking for when you were taking out the lifetime mortgage? Did it have to do anything specific for you?

Bob: I think it had to be as cheap as possible.

Nicola Palmer: Okay.

Who are the best Equity Release firms?

Bob: And that was the major consideration. In fact, Canada Life was one of the options as well. But they were slightly more expensive than Aviva, I think, with this. Stewart that’s right, yeah.

Stuart Powell: In the end, from memory, there were only two lenders that would do a day one mortgage. So from day one of living in the country, they would allow you to take it on. A lot of the others were six months and some were three years, which is a long time to rent, isn’t it, and watch the prices go up. Aviva was the right choice for you in the end, and I believe it was quite a good interest rate as well.

Bob: Yes, it’s 3.85, I think, that we’re getting, which is fixed, of course, which is in view of what’s happening or what has been happening in mortgage market, has been a huge sigh of relief from us here, although I still think it’s astronomically high. But there you go.

Stuart Powell: There’s no rates under 6% as of today, really, november, we wouldn’t have been.

Bob: Able to do it at that rate. There’s no way we could have afforded.

Nicola Palmer: It in terms of affording it. You have options with a lifetime mortgage to choose to let the interest roll up, which obviously would have been discussed, or to have some more flexibility built into it.

Bob: What were your thoughts around that right from the start? Because we decided we were going to keep the flats, obviously we were given advice on how much the repayment would cost if we paid it off every month in order to keep the interest under check and just keep the capital amount rather than allowing the interest to build up. And in fact, one of our two flats pays for the equity release mortgage that we now pay off every month.

Were Aviva Equity Release the best option for you in the end?

Nicola Palmer: Brilliant. So you set yourself up a standing order or something so that you service the interest of the debt isn’t increasing.

Bob: Well, now there is the problem, because Aviva, bless their cotton socks, will not allow you to set up a standing order.

Stuart Powell: Yeah, I think their It is being upgraded so next year that it upgrades should allow it. But no, I’ll take that away from this as a point and Nick, with the role she does, works very closely with the lenders. So yeah, let’s both take it away. Let’s put this out on our podcast and let’s see what change we can make. One of the reasons we’re doing this podcast, so great example there, Bob.

Nicola Palmer: Perfect.

Bob: Yeah, well, thank you. I love to have a good gripe, as you know, Stewart and I think.

Nicola Palmer: It’S a very fine line, isn’t it, between making sure that you as the client fully understand the implication of making that payment, but also then giving you the flexibility to make that decision and be able to make it a nice easy process.

Repaying 10% of your loan each year

Bob: Yes, I think it’s a little bit further than that because as you know, the regulations allow us only to make a 10% payoff every year. And yes, in fact, with our savings we could probably afford to do that for the foreseeable future, 10% every year. But I don’t want to do it that way. I want to use our income to actually do that and be prudent about it and live within our means and not use our savings up.

Stuart Powell: Yeah, because you won’t be alone there, Bob. You and James situation there will be mirrored right across the country.

Bob: Yeah, right. Okay. We’ll form a pressure group. We just have we just looked I’ll get the banners made up just to.

Nicola Palmer: Ask you a bit about the whole process. So obviously you met Stewart and you started the process of getting some advice about different types of product at different rates, that type of thing. How did you find the rest of the process and who else had to be involved?

Bob: You mean from within the family?

Nicola Palmer: No, I meant in terms of the other professionals that would have been involved.

Bob: There were no other professionals involved. Stewart actually was very comprehensive. We did a sort of a questionnaire session or did I fill in a form I can’t remember. But anyway, there were very comprehensive questions and you can see quite clearly the objective of that is to make sure that we, Jane and I, understand basically what we’re letting ourselves in for, because it is a lifetime commitment and we take it extremely seriously, of course. But it’s nice to know that brokers such as Equity, such as Stewart’s I can’t remember what he’s got. Ocean Finance. Sorry. Senior moment. Take it very seriously as well. And that’s necessary because it is a very serious commitment.

Nicola Palmer: Yes, definitely. And Jane, did you feel the same?

Jane: I have not really been that involved in the I mean, obviously Bob tells me what’s happening and everything, but he’s done all the spade work and set everything up.

Stuart Powell: How about the solicitors, Jane, when they came to your house to meet yay?

Bob: Oh, yes, I’ve forgotten about them.

Stuart Powell: Memorable visit?

Bob: No, that was at Hell’s House. Do you remember? We came over specially yes, that must.

Stuart Powell: Have been tricky, Jane. So, Jane, did you come over from France to meet the solicitors?

Jane: I think it coincided with a family wedding, didn’t it? Yeah, down in Exeter. So we came up to meet them at the same time.

Did you also use a Solicitor for your Equity Release?

Bob: Yeah, we met the solicitor and she was very good and very efficient, but basically we had to come over specially to meet her face to face. It couldn’t be done via phone or via email and so on and yes, under normal circumstances, that would have been a big inconvenience for us to have to come, especially from France, and the cost as well. But as it happened, we did have a family wedding down in Exeter and so we waved to Stewart as we came past. If we came into Plymouth on the ferry.

Jane: No, we went from Spain.

Bob: Oh, you’re right. We came across the Bay Biscuit, didn’t we?

Jane: Yeah, with the Minibus and the rest of the family.

Bob: Yes, sorry. We had to go through the jump, the hoops with the solicitor as well and sign all the papers and so on. And again, she was very comprehensively. Well, she made sure that we understand what we were doing, stood what we were doing as well.

Nicola Palmer: Brilliant. And how did you find that solicitor in terms of where did you find them from?

Bob: We were given an option of a number of solicitors by Stewart at the beginning, and I think we chose the cheapest. Again, there’s a surprise. Was it? Yes, it was adlington’s up in Shawley or something.

Stuart Powell: And you found the communication with them and the process with them worked?

Bob: I found the solicitor. We found the solicitor who came to see us here in Hartlebury was very good, very efficient, very professional, very prompt and everything else, as you’d expect. And she had worked at a very senior level, I think, so she was well able to handle all the questions we had and so on.

Nicola Palmer: And how long did the whole process take?

Bob: Heck to finish.

Nicola Palmer: Slightly different with you because you were purchasing a property which can obviously make things a little bit more elongated. But how long do you say from when you I look back and you you saw Stuart on the middle of March 2022.

How long did the whole process take?

Bob: So when did you move on? 22 July, eventually. But again, a Stuart will corroborate this. We had some real shenanigans selling our house in France. We got a buyer, in fact, the previous owner of our house decided she wanted to buy the house back and she led us to believe she had the finance. It was only right at the last minute that we discovered that she didn’t have the finance and the whole thing fell apart. So we had to put the house back on the market because at that point, we were committed to accept the offer from Aviva by was it the 24th or? No, I can’t remember what the date was now, but it was extraordinarily tight. And as it happens, we put the house back on the market.

Jane: We had an open day.

Bob: We had effectively, an open day.

Jane: We had about ten offers and we.

Bob: Sold it through Sell Your Own House type website in France. I think our son in law did it for us. He placed it on there and he rang me up on the morning that the advert went in. He said I’ve had I think it was 20 inquiries already and they were pouring in because the market was busy, as it was here in the time from when we had our first buyer who pulled out. When we put it back on the market, the market had exploded. So by that evening, we’d had eight offers on the house in one day. We’d had several personal visits from people who couldn’t be bothered to ring, just came and turned up and we sold the house for 35,000 more than we actually had it on the market for.

Nicola Palmer: Fantastic. So frustrating that the First Lady pulled out.

Bob: But actually, the worrying thing is, again, And of course, once it got beyond the offer date, we would have then been subject to an ever increasing potential mortgage rate. 3.85 is enough. Is a lot. But as Stuart knows, when we first started, it was quite a lot lower than that. And it went up in a period of about 24 hours or so, didn’t it? Stewart there was a certain gentleman who helped us out and I don’t know how he did it, but Stewart managed to extend that mortgage offer by about a week, I think. Wasn’t it Stewart? I can’t remember. And because of that we were able to complete fantastic. And if it had not been for that week, we wouldn’t have got this house. We’d have lost it, I’m pretty certain of that.

Nicola Palmer: That’s brilliant.

Bob: That’s why we like him quite a lot.

Nicola Palmer: So you’re all in and you’re all settled now?

Bob: Yeah.

Nicola Palmer: With your children and your grandchildren?

Bob: Yeah, we all went out yesterday to the local garden center and had a bit of an outing. It was great. And these are the things we can do now that we can actually get together. They’re not hugely special events now, they’re everyday events, which is fantastic. And we’re getting to know our three little ones as well.

Jane: We’ll be here next week for the new one.

Bob: Yeah, Friday this week she’s having a.

Jane: Caesarean, so we know when the baby’s arriving.

Are there any tips you would give people in your position?

Nicola Palmer: Yeah. That’s lovely. If you sort of looked back on the process, is there anything that you would do differently or any tips that you would give to people that were perhaps in your position now as you were a few months ago?

Bob: Well, I think to use very good mortgage broker who explains everything to you to possibly find solicitors who are a little bit more hands on, a little bit more friendly, a little bit more helpful, I think on a personal level, not just professionally, because I’m sure they’re extremely good in what they do. But I was under the impression that everybody got an equity release mortgage when they were buying another property. But that isn’t the case, is it? This is quite unusual, from what I gather.

Stuart Powell: It’s an interesting question. So not enough people know that you can use a lifetime mortgage or equity release to purchase a property. I mean, yeah, what if I got the sign on the back of me? So we did that advert probably about three years ago and I haven’t even purchased a property on there. It is a great thing for lots of people to be aware of because people think I own my property, therefore I can release some of the equity they don’t think I’m purchasing, so I can release some of the equity in the property I’m purchasing so that I can afford the whole purchase price.

So, yeah, you’re absolutely right. And it’s one of the reasons I wanted you guys on here, because for people to understand that you can do what you did, it doesn’t have to be you moved from France, it can be you moved from London to Devon or vice versa. And if you haven’t got enough capital to purchase the new property, or if you want to release some of the or keep some of your capital for living in retirement and have a small mortgage on the property, those things can be done. So, I think.

Nicola Palmer: Yeah.

Stuart Powell: You raised some important points today.

Bob: Yeah. But I think having been through it ourselves, it was very stressful because of the time limitation that we had, particularly on that Aviva date. Everything was centered around that date. And because they were so intractable, because you can’t control how quickly your house is sold, either the one you’re selling or the one that you’re buying, you have a limited influence as the vendor or the purchaser. And if you’re stuck with a date and they will not move, then in a way, it can make or break the whole thing. Which is why it’s so important that Stuart was able to get that extension for us only a few days. It made the world of difference for us.

Stuart Powell: Yeah, I guess what I’m hearing, and it’s lovely for me to have this conversation with you, because we’ve had lots of conversations, but not an overview of everything. Looking back, it’s that caring side, it’s that talking side, it’s that actually getting to know you as people rather than you just being a number. And it’s the flexibility of the products as well. And the linkage of those two things is where the industry needs to go. Would you say that?

What are the Important Considerations associated with Equity Release?

Bob: Yes, I’d agree with that especially bearing in mind that the profile of your average equity release person is likely to be an older person, I would have thought in which case they’re not as confident, they’re not as risk what’s the word? Risk? They’re not such risk takers as they might have been in their earlier lives. They probably didn’t want a mortgage but they’ve decided that for whatever reason that it’s the best for them and they need reassuring that they’re doing the right thing. So yes, I think the human side of it is probably perhaps one of the most important aspects of this type.

Nicola Palmer: Of mortgage it’s finding someone that you can trust, isn’t it? Somebody that you feel confident with that’s going to give you all the answers and not hide anything or hold anything back.

Bob: Yeah wonderful.

Stuart Powell: Fantastic.

Nicola Palmer: Jane, anything you wanted to add?

Jane: No, obviously there were these worries, but it’s all gone smoothly in the end and we’re happy that with the service that we’ve had, it’s been excellent, great.

Nicola Palmer: And I think that’s the thing. I think, sadly, sometimes you only hear the horror stories when it comes to lifetime mortgages or equity release and it will be so good for people to actually hear a positive, happy ending as well. I think that’s brilliant.

Stuart Powell: Yeah so thanks again for your time.

Award ceremony

Bob: Guys, it’s a great pleasure. Just one question, Stuart have you had your reward ceremony yet?

Stuart Powell: It’s on Thursday this week and there’s four finalists and we’re very excited, very nervous, but yeah, we feel that we won anyway to get as far as we have so whatever the outcome is, we’re celebrating on Thursday.

Bob: Are you one of the finalists? Is. That what you’re saying?

Nicola Palmer: Yeah.

Stuart Powell: There’s four finalists.

Bob: Fantastic.

Stuart Powell: Last four nationally.

Bob: Okay, well, listen, we wish you all the very best with that. Let us know whether you win or not. Let us know if you win.

Nicola Palmer: He’s got a lot to live up to because I won my category last year.

Bob: Oh, did you.

Stuart Powell: Wear the badge saying, you know, winner?

Nicola Palmer: I usually have my little statue.

Bob: Well, we’re in the company of winners.

Nicola Palmer: Well, thank you. As Stuart said, thank you so much for your time today. We really appreciate it. And I think it’s going to make a difference to so many people just to hear from people that have been through the journey. I think it’ll make a real difference.

Stuart Powell: Yeah, thank you.

Bob: I hope so. I mean, if you do need any help, again, we’re quite happy to do this sort of stuff, as you’ve been able to tell. I’ll talk until the cows come home.

Stuart Powell: Anyway.

Bob: Jane sits here letting me say everything, but there we go. So I hope it’s useful to you and wish you all the best guys. All right. Happy Christmas. Bye now.