Lifetime Mortgages

Equity Release

Is releasing cash from your home right for you?

Today, we are typically a cash poor but property rich society. For many people, your home is likely to be your biggest financial asset. It’s often worth much more than any other investments or savings.

However, getting your hands on this cash to pay for renovations, long-term care or retirement is a major step. It requires selling your home, downsizing or releasing your cash in some other way. There are lots of things to consider.

First off you need to understand clearly what’s involved. Releasing equity is simply the process of making the money in your home work for you, either by giving you a cash lump sum or a regular income. There are many options, depending on where you are in life.

Planning for the future

Consulting a financial adviser before making any concrete decisions is wise. Borrowing against or selling your home is a long-term financial commitment. Some lifetime mortgages add the interest to the amount you owe each year; this will reduce the remaining equity in your home, so if you live a long time or house prices fall, there may be no equity left for your heirs to inherit.

Depending on your financial situation, we can help direct you towards the best option:

  • helping you to consider the most appropriate way to generate cash or income;
  • highlighting the risks and real costs involved;
  • illustrating how the value of your estate will decrease;
  • discussing the implications for your family on your death.

If you’re thinking seriously about equity release, we may consider things you haven’t. Why not talk through your ideas and concerns with us today?

‘Equity Release’ includes home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration.

What can equity release be used for?

The money that you release from your home’s value can be used in any way you want. The most common purposes are:

  • Home improvements;
  • Improving lifestyle;
  • Private medical care;
  • Helping family members.

What else should I consider?

Equity release products involve borrowing against, or selling your home. It is a long-term financial commitment. You need to be absolutely sure this is your best option. As impartial specialists, we can help you consider other ways of generating cash or income before recommending an equity release plan. This could include:

  • Cashing in existing savings or investments;
  • Moving to a smaller home;
  • Utilising local authority grants;
  • Making sure you are claiming all the benefits you are entitled to;
  • Family loans.

You should also consider the ways that equity release might actually reduce the benefits you are entitled to. Means tested benefits such as the Pension Credit, and Age Allowance may reduce if you increase your income.

Equity release plans will reduce the value of your estate on your death and in some cases, using equity release might mean that none of your property’s value is left to your heirs. In the case of Lifetime Mortgages that add the loan interest to the amount you owe there are usually guarantees to ensure you never owe more than the property is worth. Without this guarantee it is possible to end up owing more than your house is worth.

We strongly recommend discussing your intentions with your family before making a decision.

Am I eligible for equity release?

  • Are you a homeowner?
  • Are you (or you and your partner) over 55?
  • Is the property your main private residence?
  • Is your home worth at least £40,000?

Answering yes to any of the above means you are almost certainly eligible for an equity release plan. Several factors can influence providers’ decisions. The younger you start an equity release plan, the higher value your property will need to be. Neither your income nor state of health has any bearing on eligibility. However, if you are in poor health, equity release may not be the most suitable option.

Are there additional costs involved?

Yes, the equity release lender will want to know how much your property is worth on application and will charge to administer and set up the scheme. In most cases you’ll have to pay:

  • Provider arrangement or application fees, usually between £300 and £800.
  • A valuation property fee, to check your property provides enough security for the loan. For a £100,000 property, this is likely to be between £300 and £600.
  • Legal fees, usually between £300 and £600. You should ask solicitors for a fee breakdown before proceeding.

Some lenders and reversion companies may refund some or all of these fees when the loan has been set up. In addition, you’ll still need to take out building insurance for all the time the plan is in place. Lenders may make a charge if you decide to repay the loan early.

We sell lifetime mortgages only and not home reversion plans, though we will consider all lifetime mortgages available in the market. In some instances it may be possible that a home reversion scheme may be a viable proposition.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

A flat fee of £495 will become payable at the outset. In addition, we will retain any commission paid by the lender. We will tell you how much the total fee will be before you apply for a lifetime mortgage, but you may ask for this information earlier. You will receive a key facts illustration when considering a particular equity release product, which will tell you about any fees relating to it. You also have the right to request an illustration for any equity release product we offer.