Equity Release to buy a boat

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Snowgoose-1

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Probably not for the younger generation but more for the longer toothed sailor who is asset rich but cash poor.

Perhaps in his 70's with his life partner gone , his ideal boat comes up with bow thruster and other goodies that could extend his sailing career a few more years than the norm.

Anyone done it and what scheme did you go for ?. Perhaps even some sailing financial advisers on these fora .

TA
 
Choice of scheme is independent of what you spend the money on. What suits one person may not suit another, and while it is useful to hear explanations as to why an individual made a particular choice it is unlikely that their circumstances and attitude to risk are the same as yours.

The big cost to most schemes are the high current rates of interest and the compounding effects on the size of the debt, although this can be reduced by using one of the lifetime mortgage or drawdown schemes. However most of these require making interest payments which may not be possible if you are cash poor.

Plenty of information and advice available on the options. which you choose (if any) is really up to you. BTW for some suuh schemes have the effect of reducing the value of assets for inheritance tax purposes!
 
johnalison said:
We moved house from inside the M25 to outside and that basically paid for the boat. This may not have been a good idea in investment terms but I don’t regret it.
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We did the same, N London to Southampton, which allowed us to buy a house to live in and one to let. The income from the let is what allows us to run a boat, though not one with all the toys we'd like to keep sailing into serious old age.

One thing to consider for someone considering equity release to buy a boat is how long they can reasonably expect to keep sailing. I know one person in their 60s who is finding boat ownership too much and expects to be boatless in a year or so, another who is nearly 90 and still races regularly.
 
I have not done it but instinctively feel that to downsize or move to a less expensive area, is the way to go - as in the posts above. Over the years there have been all sort of financial schemes run by profitable companies which have either collapsed or proved to be a very bad investment. At least by moving house you have control and know what you are getting.

With the present Government eyeing a tax on assets it could also be a good wheeze to move to a smaller property and put cash into something you can enjoy now, rather than for politicians to redistribute it into the pockets of others.

.
 
In my experience it is far better to use a small local broker who you can keep in touch with. They can usually find the best interest rates and may also waive their commission from you (while they still get their main commission from the lender). As far as I am concerned there are no downsides to this,
 
Snowgoose-1 said:
Probably not for the younger generation but more for the longer toothed sailor who is asset rich but cash poor.

Perhaps in his 70's with his life partner gone , his ideal boat comes up with bow thruster and other goodies that could extend his sailing career a few more years than the norm.

Anyone done it and what scheme did you go for ?. Perhaps even some sailing financial advisers on these fora .

TA
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I find it extraordinary that anyone would even consider this. The comments on downsizing say it all, very sensible solutions but equity release is, IMHO, an abomination that is only considered by totally financially unwashed victims. Please do the sums properly, with decent outside help if necessary, and then I cannot believe that you will seriously consider this.
 
doris said:
I find it extraordinary that anyone would even consider this. The comments on downsizing say it all, very sensible solutions but equity release is, IMHO, an abomination that is only considered by totally financially unwashed victims. Please do the sums properly, with decent outside help if necessary, and then I cannot believe that you will seriously consider this.
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That's far too simple a response. It depends heavily on the individual circumstances. For example, if there is a £750k 4 bed house but no beneficiaries to pass estate value to, then a form of ER is potentially a very useful and sensible part solution. Otherwise it's potentially a massive IHT hit when the time comes. Better to enjoy the value now whilst alive. It's impossible to generalise, it's important to plan, plan, plan and get good advice. ER has a bad reputation because some people went in with their eyes closed, which is madness in respect of any material lifetime contract.
 
GEM43 said:
That's far too simple a response. It depends heavily on the individual circumstances. For example, if there is a £750k 4 bed house but no beneficiaries to pass estate value to, then a form of ER is potentially a very useful and sensible part solution. Otherwise it's potentially a massive IHT hit when the time comes. Better to enjoy the value now whilst alive. It's impossible to generalise, it's important to plan, plan, plan and get good advice. ER has a bad reputation because some people went in with their eyes closed, which is madness in respect of any material lifetime contract.
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Agree with that. Recent schemes are far more flexible with greater protection. Nothing unusual about borrowing money against the security of the house. That is just how I financed my first new boat. Of course it was easier then (25 years ago) when interest rates were low and interest only mortgages were available. Now interest only ER products are available, but as I suggested earlier not necessarily suitable for cash poor people. You can also get ER with the option of repayment before the sale of the house which might suit a plan of buying a boat for maybe 5 years use then selling.

Downsizing is not as good as it sounds. Firstly there are the transaction cost, which are easily £15-20k even if you can find a suitable smaller property with for example all the support services you may need as you grow older. Then the disruption and spend needed to make the new house a home. It works for some - my SIL has just done it, selling her house to one of her grandchildren and buying a flat only a few hundred yards away . all in the town where she has lived all her life. There are of course long term benefits of living in a smaller property and maybe more suitable to make the change earlier in the retirement cycle rather than waiting until you are in your 70s.
 
Definitely move to downsize. We moved from Oxfordshire to the Highlands 20 years ago. Far better house than we ever would have afforded down south much less crowded much nicer scenery close to the sea and mountains.

Why anyone stays in the over priced over crowded south when they no longer need to work for a living (i.e. retired) beats me.
 
GEM43 said:
That's far too simple a response. It depends heavily on the individual circumstances. For example, if there is a £750k 4 bed house but no beneficiaries to pass estate value to, then a form of ER is potentially a very useful and sensible part solution. Otherwise it's potentially a massive IHT hit when the time comes. Better to enjoy the value now whilst alive. It's impossible to generalise, it's important to plan, plan, plan and get good advice. ER has a bad reputation because some people went in with their eyes closed, which is madness in respect of any material lifetime contract.
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If there are no beneficiaries, why care about IHT?
 
In France we have a scheme called "Le viager".
Basically you sell your house to some one for a certain amount "Le bouquet". (Equity release).

You get to stay in your house and the buyer pays you a certain amount each month "Le rente viagère" (Pension).
That continues until you are dead, then the buyer finally gets full ownership of your house.

If they don't pay the monthly amount, then basically they lose everything and you can repeat the process with a different buyer keeping what you have pocketed up to that point.

There are also some fiscal advantages as well.
 
westernman said:
In France we have a scheme called "Le viager".
Basically you sell your house to some one for a certain amount "Le bouquet". (Equity release).

You get to stay in your house and the buyer pays you a certain amount each month "Le rente viagère" (Pension).
That continues until you are dead, then the buyer finally gets full ownership of your house.

If they don't pay the monthly amount, then basically they lose everything and you can repeat the process with a different buyer keeping what you have pocketed up to that point.

There are also some fiscal advantages as well.
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Was there not some French lady who did something like that and went on to live to a ridiculously old age, to the mortification of the house-owner/s?
 
Tranona said:
Downsizing is not as good as it sounds. Firstly there are the transaction cost, which are easily £15-20k even if you can find a suitable smaller property with for example all the support services you may need as you grow older.
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But on the other hand a “family home” is often actually a poor choice for an elderly person and those problems are coming eventually. If you equity release, do you potentially make your life harder when that time comes - trapped in an unsustainable property.
 
Downsizing is not without very considerable cost. The payment of interest over a number of years until the boat can be sold and the ER repaid may not be a bad deal. A higher value house will increase in value more than a lower value property in the interim.
 
Thanks for the replies. All good stuff.
As mentioned, hugely dependent on personal circumstances .

The older I get, and the more funerals I go to each year , I realise how short life really is. In my case, downsizing would be an unlikely
option. I would be further away from the sea and my grandchildren. Also, probably a flat for me which can be a bit depressing when you are on your own with no garden or close neighbours. One can also take quite a financial hit when losing a soulmate's pension.

The big plus for me at the moment is my health which has no price and I have no one else to please. I shall probably go for a lifetime mortgage product but who know's what the future may bring.
 
I think equity release is like selling your house for half of its value.
Personalky I would not do it.
But if it makes you happy go for it.
It makes me laugh to see equity release adverts suggesting you use the money for home improvements. I havent seen any adverts suggesting you blow it in boat but I think it's a great idea.
 
I would avoid equity release like the plague. I would rather downsize the house or boat rather than use ER. For one thing you might need that money if you ever get to the point when you can't look after yourself. Having some capital will give you a measure of control and choice.
 
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