In many cases, the first thing we hear when we mention that we work with our clients to help them to achieve Equity Release in Spain is “Rip-Off”. We try to explain that we are different. Our company is not buying the houses ourselves, just introducing buyers and sellers to each other. Equity Release Spain broker the deals, protect both parties and ensure nobody signs anything they are not happy with.
The talented team members are not hard selling anyone, in fact we are helping them. These are homeowners who contact us, not the other way around.
Brian Tracy, the famous American business coach said that you are successful to the extent that you HELP PEOPLE.
That is what we are doing with our Equity Release plans and better still, we are lifting the curtain and allowing both buyers and sellers to snoop around. If regular investors agree with us that these are win-win deals then, we are all winning!
What are we “selling”?
Equity release in Spain is a financial product that allows homeowners, typically those aged 55 and above, to release some of the equity tied up in their property while continuing to live in it. The equity can be released in the form of a lump sum or regular payments. While equity release can provide a source of income for retirees and help them meet financial needs, it has also been criticised, especially on Facebook and considered a potential “rip-off” for several reasons.
Reasons why Equity Release with other companies in Spain has a bad name:
- High interest rates: Equity release products often come with high-interest rates, which can accumulate quickly over time. As a result, the amount owed to the lender can significantly increase, potentially reducing the amount of inheritance left for the homeowner’s beneficiaries.
- Compound interest: Some equity release products apply compound interest, meaning interest is charged on both the initial loan and any interest that has already been added. This can lead to a substantial increase in the overall debt owed.
- Early repayment charges: Many equity release plans come with substantial early repayment charges if the homeowner decides to repay the loan before the agreed-upon term. These charges can be quite burdensome and make it difficult for individuals to switch to more favourable financial products if their circumstances change.
- Reduction in inheritance: As mentioned earlier, taking out an equity release plan can reduce the amount of inheritance left to the homeowner’s beneficiaries. This can be a significant concern for those who want to leave a substantial inheritance for their loved ones.
- Impact on benefits: Receiving a lump sum from an equity release plan can affect eligibility for means-tested benefits. It’s essential for individuals to fully understand how equity release might impact their financial situation before proceeding.
- Potential negative equity: If property prices fall or the interest accumulates rapidly, there is a risk that the debt owed may exceed the value of the property. This situation is known as negative equity and can create significant financial difficulties for the homeowner and their heirs.
- Lack of flexibility: Equity release plans often come with limited flexibility. Once the contract is signed, it may be challenging to change or renegotiate the terms, potentially leaving the homeowner with fewer options in the future.
It’s important to note that not all equity release products are necessarily a “rip-off.”
Some may be suitable for specific individuals and their unique financial circumstances. However, given the potential risks and complexities involved, it’s crucial for anyone considering equity release to seek independent financial advice and carefully weigh the pros and cons before making a decision.
So, these are some of the down sides we encountered and some of the objections to our Equity Release plans. What about from the investors point of view?
Individual investors, that means you and I, can help our pensioners to achieve what they need, (cashflow) while making a really good, safe and ethical investment.
Still, individual investors did not want to be associated with anything remotely unfair.
Hence the perfect plan; SELL and STAY deals.
We are now working with our property owners (those seeking Equity Release) to broker deals with them and investors directly. Just like a normal property sale here, Sellers set the price and we introduce the investors. We are not working with any big funds right now who can be considered to be “vulture funds”.
It’s as simple as this: An investor comes to us with 50,000 for example. We talk to our contacts in BankInter to see if that investor is eligible for any more finance. Assuming they are and we now have a pot of 100,000. We present a proposal, not an offer, wording is important here to our property owners.
They take their time, speak to their lawyer, talk to their kids etc. No pressure.
Remember our job is to broker the deal; we give you this, if you give us that, sort of negotiation.
There is no need for a hard sell.
Generally everyone loves Sell and Stay deals which allow the investor to take possession of the property immediately. A typical discount on a deal like this can be around 33% but anything from 20- 50%.
- It is all signed in the Spanish public notary. Also registered is the owners right to rent that property back from the new owner for as long as they like; for life in most cases.
- The buyer gets a huge discount and a “tenant” who, although they are paying a dramatically reduced rent, will maintain the home just like they did for the past 20 years!!
The owner; and remember we want to avoid the “rip off” tag, what do they get?
- They get cash, right into their hand in a tax efficient manner.
- They have the option to donate some of that money now, for virtually no inheritance taxes to their heirs.
- They don’t have to move away from their home, their community, or their friends.
- They know that their financial future is secure as is their right to remain living in the house, in many cases for the rest of their life.
- At any stage before completion, unlike our main competitor, we allow sellers to change their mind. We introduce them to the accountant, the lawyer, the buyer, everyone. Nothing is hidden here and we know that we only win, if everyone wins!
Rather than consider SELL and STAY a “dud deal” for our property sellers, (or investors!) We are looking at it as a new lease of life; no more financial issues, no upheaval and the full protection of Spanish Solutions, a high street bank, the public notary and the Spanish land registry.
Is Equity Release though us a “Rip off” or the most important public service investors have ever carried out amongst the ex pat community in Spain? We know the answer.
Investors are always welcome to capitalise on this niche; Help our elderly neighbours and make a risk free, high yielding return.
Why not contact Sharon about how you can benefit from a Win/win equity release deal in Spain?
To View our full portfolio of Equity Release properties please click here.