This weekend, The Sunday Times published an article by ex-tennis star Andrew Castle, who criticised ‘rip-off’ equity release schemes after one cost his elderly relatives £46,000. One of our recent clients has responded to this article, and we share his open letter below discussing his positive experience with Equity Release:
Dear Money Editor,
You invited comments on Equity Release experiences following your article on this subject on 2 August.
My overall comment is that your article was accurate concerning the situation of Andrew Castle’s parents-in-law but, because of the focus on their plight, may have given a blacker picture of the industry and facility than actually exists. Put simply, we have had superb service and are totally informed and satisfied.
To expand – as briefly as I can:
We had £51.5K invested up front via an IFA that has a very good reputation. They used Old Mutual Wealth to manage the account and various investment managers to invest the funds. Over two years we were £1500 up after all these players had paid themselves – that is somewhat less than if we had put the money in our Nationwide account. We then had an opportunity to buy an apartment in Cape Town to be renovated and managed by business contacts who had become friends. The rental return is estimated at 10% (early days and not yet achieved as we have only owned the apartment since late June) and the capital appreciation has been 15% over the first three months since we agreed the sale – but that is an aside!
We took out the £53K from our investments and needed approximately £80K. We chose Equity Release and used an agent called Chris Chance from The Right Equity Release company. His service was superb. He checked so very carefully that we fully understood what we were doing and the implications. He showed us how the sum owed would grow with compound interest over 19 years. He recommended Aviva whose product has a variety of features, such as repayment of interest and/or capital, no penalty if we have to sell the house for a variety of reasons, and others. Aviva then responded swiftly and efficiently, we were visited by a solicitor who made sure that Chris Chance had told us everything (he had) and we had the money in two weeks or so – even though Easter intervened.
Altogether a good experience with three organisations who all took care to ensure we knew what we were doing and the consequences of our decisions. It gets better. After listening to a friend who was considering taking out Equity Release, we recommended Chris Chance. They met and subsequently did business. Last week we received a cheque for £100 from Chris Chance for the introduction. We had no idea that he paid a referral fee. He could have kept it and we would have none the wiser. But he didn’t. That is what I call doing business responsibly and honourably.
The lesson? We used Equity Release to enhance our investment returns. We may have made a mistake as currency movements can wipe out capital gains. However, we were totally appraised of the costs of using Equity Release to make the investment. We would not have used Equity Release at our ages (72 and 69) to finance a consumer good or to enhance daily living. We might do it in 10 years’ time given that we have another £89K that we can draw if we wish. Our conclusion? Be careful, yes, but do not be paranoid about Equity Release.