Later Life Choices

What is Equity Release?

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Equity release refers to a range of products available to those over 55 that let you access the equity (cash) tied up in your home. They allow you to take the money you release as a lump sum or, in several smaller amounts or as a combination of both.

There are two equity release options:

The Lifetime mortgage 

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This is by far the most straight-forward method of equity release and also the most popular.

 

This is a mortgage secured on your main residence much in the same way as a conventional mortgage. However, there is no fixed term and normally there are no monthly repayments required. 

 

The interest accumulates or "rolls up" and adds to the value of the secured debt.

 

The loan will end upon your death or if you leave your property to go into long term care. At this time the original loan and the accrued interest will be paid.

 

Some providers allow you to ring-fence some of the value of your property as an inheritance for your family.

 

You can choose to make repayments or let the interest roll-up and can now choose between a fixed or variable interest rate.

 

Home reversion plan

 

This is an arrangement whereby you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments.

 

You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance.

 

The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.

 

Suitability

 

Equity Release is becoming more popular as many people find that their home is their biggest asset but do not necessarily want to sell to raise funds when needed. You retain your home for your lifetime whilst benefiting from the money released.

However, many people also wish to leave an inheritance to their children and are wary of the total cost that an equity release plan may incur over time.

 

It is vitally important to take advice from qualified and experienced advisers such as us to assess whether equity release is suitable for you. Being independent means that we can source the most suitable product from the whole of the market to ensure that our clients get the very best deal for their circumstances.