Equity Release
Will equity release work for you?
As you get a little older, you might recognise that releasing some of the equity in your property could help with a much-needed purchase, the requirement for regular income to supplement your pension or to support your healthcare needs. Equity release is a fast-growing market which allows homeowners over the age of 55 to release some of the money tied up in their property, without the need to make any monthly repayments. A lump sum or regular payments can be provided, depending on the type of plan taken. There are two kinds of equity release plan, Lifetime Mortgages and Home Reversion and both are regulated by the Financial Conduct Authority.
How can I help?
As a fully qualified and registered equity release adviser, I can help you navigate the options available to you, to ensure you take out the right plan and understand the implications, advantages and disadvantages involved. Firstly, we will discuss what your needs are and how much money is required. A monthly amount might support a lower pension to make life a little more comfortable, whereas a lump sum could be used for home improvements, to purchase a new car or to gift to a family member. Once we understand what you want, I will advise on the most appropriate plan for you.
Lifetime Mortgages
With a lifetime mortgage, you borrow a lump sum against the property and that loan grows with interest over time. You would not need to make monthly repayments, but the interest does accumulate. The loan is repaid when the last remaining borrower passes away or needs long-term care, typically through the sale of the home. However, rest assured that you retain full ownership of your home and will continue to live there, without any mortgage repayments.
Home Reversion
With home reversion, you sell a portion (or all) of your home to a reversion company in exchange for a lump sum or if you prefer, regular monthly income. You will however, continue to live in your home rent-free. The reversion company will then get a share of the proceeds when your home is sold, usually after your death or when you enter long-term care.
Things to consider
Professional Advice: It’s crucial to seek professional advice from a specialist equity release adviser or suitably qualified mortgage broker before entering into an equity release scheme, so please do not hesitate to contact me for further advice.
Age
Most equity release schemes are available to those aged 55 or older.
Property Value
Your home must meet a minimum value to qualify.
Interest Rates
Interest rates on equity release products can vary.
Costs
There can be arrangement fees and other costs associated with equity release.
Potential for Reduced Inheritance
Equity release can reduce the amount you leave to your family.
Equity Release / Lifetime Mortgages / Home Reversion Plans
will reduce the value of your estate and can affect your eligibility for means tested benefits.
As you can see, there is a lot to think about before embarking on an equity release plan. However, they can work very well for people who have equity in their property and would like to utilise some, or all, of it before they pass away. As I have mentioned though, there are many implications and options that need to be discussed. I would be very happy to talk through all of this with you, so do not hesitate to get in touch.
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