27/06/2018 by Matthew Standish 0 Comments
Martin Lewis talks about equity release..... but misses vital points
Martin Lewis tell readers - For the lifetime mortgage equity release, the typical rate is 5.14%, substantially higher than most standard mortgages.
The eye-watering price-tag your estate would have to repay comes if you’re not making monthly repayments to reduce the debt, so the interest compounds and compounds. For example, borrow £20,000 aged 60 at 5.14% on a £120,000 home and the amount you owe doubles every 15 years. So live until 75 and you owe £40,000, live until 90 and you owe £80,000.
As well as the actual cost of the interest, you will have to pay arrangement fees. These can typically tally £1,500-£3,000 in total, depending on the type of plan being arranged and can include things such as application fees, fees for legal work and surveryor fees.
Firstly, I would like to thank Martin Lewis for talking about Equity Release, however, he has missed a few vital points in my opinion.
Is 5.14% really "substantially" higher?? Martin Lewis omits to say that these rates are generally fixed for life and they actually start from around 3.7% so to use the phrase "substantially" is a little exaggerated.
He fails to talk about house price inflation. Of course, this is not guaranteed, but surely when talking about "eye-watering price-tag your estate would have to repay” It would be more informative to offer a balanced view and ask the question - what do you think your property will be worth in 30 years’ time?
Martin Lewis shows tweets about people complaining about their parents having to pay back huge amounts. It would be interesting to hear why their parents did equity release in the first place? and how it actually could've changed their life. It would've also been balanced had Martin Lewis shown some good news stories from Equity Release as well
I'm proud to be an Equity Release adviser and believe that every case I write is for my client’s best interests and has a real positive impact on their lives. When I speak about Equity Release to my clients or client’s families I always give a balanced approach and ensure they are aware of all the costs and risks as well as the benefits. It’s great that influential people are talking about the market I am passionate about, but perhaps Martin Lewis should've simply said "if you want impartial advice about equity release then speak to a specialist" after all - he's not qualified to give advice!!