Equity release can play a crucial role in retirement funding and the flexibility and safeguards which are built into plans that complies with the Equity Release Council product standards enable thousands of home owners every year to tap safely in to the equity within their home without having to worry about making monthly repayments.
If you are thinking of taking out an equity release plan then you need to find out as much as you can about your options and weigh up the advantages and disadvantages fully before you decide if equity release is right for you.
Ultimately an equity release scheme enables you to release cash from the value of your home in later life, to help fund your retirement or pay for an unforeseen expense. It can be a helpful form of finance in certain circumstances, but will not be suitable for everyone and there may be alternatives to investigate. Some mainstream mortgage lenders have no maximum age at the end of the term.
We can talk to you about the pros and cons of the various options, and if equity release is the right mortgage solution for you.
There are two types of equity release; Lifetime Mortgages and Home Reversion plans. Both of these are regulated by the Financial Conduct Authority.
By using an equity release product, a home owner can draw a lump sum or regular smaller sums from the value of their home, while remaining in their home. Lifetime mortgages
Lifetime mortgages (available to those aged 55 and over). Allows you to borrow a proportion of your home’s value. Interest is charged on the amount, but nothing usually has to be paid back until you die or sell your home. Home reversion
Home reversion (usually only available to those aged 65 and over). Involves you selling a share of your house to a provider for less than the market value, and you can remain living in your home until you die or move to a retirement home. When the property is sold, the provider will receive the same share they originally bought for whatever the home sells for as repayment. Is equity release the right option for you?
Whether equity release is the right option for you depends on your circumstances such as:
- your age
- your income
- how much money you want to release
- your plans for the future
When releasing equity, it’s tempting to focus on the immediate situation and financial boost you will get from the money you unlock, but you need to look at how it will affect your future choices and financial situation in later life.
If you think equity release could be a good finance option for you, book a free appointment with one of our friendly specialist mortgage advisors to discuss whether it is the right solution.
Done correctly, equity release should not have an impact on an individual’s tax position or their state benefits; however each individual’s circumstances need to be assessed.
Although we no longer offer Equity Release the team are fully qualified in this specialist lending area, and will help you to understand the steps involved, talking you through your options, the effects this might have on state benefits, tax and any other obligations.
Equity Release includes Lifetime Mortgages and Home Reversion Schemes. We can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion Schemes or Equity Release.