Is there a governmental interest free credit plan for uk penioners who own their own home.?

Question

Is there a governmental interest free credit plan for uk penioners who own their own home. My mother and my aunt have both heard of this but cannot find any details. I've searched the net for them but find nothing related, only loan sharks. If you have no detailed knowledge then suggestions on search words would also be helpful (other than "governmental interest free credit plan uk penioners homeowner"). Thanks.

Answer 1

Various sharks offer 'Home Revision' or 'Equity Release' Plans etc.

These could be said to be 'interest free' in that they give you a small Loan (secured against the house) similar to an 'Interest Only' Mortgage ... however they 'roll up' the Interest (and then charge interest on the rolled up interest and so on) so you don't have to pay back the Loan until you die.

At that point the house is sold to pay off the loan and the rolled up interest. Usually there is a guarantee that they will not take more than 100% of the house. If the house is worth more than the loan (fat chance) there may be a surplus that goes into your estate.

Plainly how much they will lend you depends on how long they expect you to live (i.e. the risk they take that you live for a very long time and the house does not go up enough cover the 'cost' of the loan)

Most schemes operate on a 'gradual draw-down' basis ...

Eg. Say your house is worth £400,000 & you are 85.

An Insurance Company might 'lend' £100,000 which you 'draw' at £10,000 per year. In 10 years you have used the lot, and the Insurance Company owns your house ...... (not bad deal from their point of view ...)


On the other hand there IS a Government run scheme that operates like this :-

It's called 'Going into a old folks home' ... the local authority charge you £4,000 a month untill your savings are exhausted and then they force you to sell your home...

At that point you are 'Interest Free' (since you no longer have a house to be interested in).