What is Equity Release? There are two types of equity release; Lifetime Mortgages and Home Reversion Plans. By using a safe 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. Things have changed dramatically over the last few years substantially improving the product as far as the public is concerned – lower costs, more flexibility and stronger inheritance guarantees. Free Equity Release calculator.
What is Equity Release Used for?
An equity release plan is a way of accessing extra cash without having to move home. With some equity release plans, there are no repayments to make and with a lifetime mortgage, you continue to own your home. Plans all come with a ‘no-negative equity guarantee’ which means you can never owe more than your home is worth, and some plans include an option to guarantee an inheritance.
The money raised can be used for various objectives, including:
- Repay mortgage
- Home improvements.
- One-off purchase e.g. car, caravan or holiday
- Enjoy a more comfortable retirement
- Help friends or family members financially.
Should existing Equity Release Plans Be Reviewed?
Anyone with an equity release plan more than a few years old should have it reviewed. Not only have interest rates dropped substantially, but flexibility has also increased, so a review is really important to ensure you have the best terms.
The Equity Release Council is an association of the main Equity release firms charged with driving up standards in an industry which essentially deals only with over 55’s and sometimes folk who are considerably older than that.
We will be adding an Equity Release Calculator to our site shortly. We ourselves don’t advise, but because we recognise the crucial importance of equity release in an ageing and under pensioned population, we pass on enquiries to a leading whole of market provider, rather than a company selling their own plans. There is a wide market, and interest rates and terms and conditions vary widely, so advice is essential to get the best terms.
Equity Release – newer plans knock spots off many old ones – so review.
An especially interesting fact is that interest rates on both types of plans have dropped dramatically over the last few years, so it often pays to consider swapping schemes for a much lower interest rate, and we know the right people to have a chat with – just call or email and we’ll put you in touch for a no-obligation chat.
What is Equity Release and why is it of growing importance in retirement?
Equity release can boost retirement funding substantially. Modern plans have great flexibility and strong safeguards in which enable thousands of homeowners every year to tap safely into their housing wealth without having to worry about making monthly repayments.
If you are thinking of taking out a new 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. We can introduce you to fully qualified financial advisers. They will help you to understand the steps involved and talk you through your options, the effects this might have on state benefits and tax and your obligations. And they can also explain the full benefits of equity release. Done correctly, equity release should have no impact on an individual’s tax position or their state benefits; however, each individual’s circumstances need to be assessed.
Some times the only purpose of equity release is to cut Inheritance Tax.
Many peoples assets are almost entirely their home, so the opportunity to pass on cash, free of Inheritance Tax may only be available through equity release funding lifetime giving at a potential discount of 40%. That is provided you survive 7 years after the gift.
Which Type of Equity Release Plan would be Right for You?
Part of the advisers’ mission is to discuss the option and the most suitable type of plan, before recommending any specific plan. That choice will cut the myriad of options down, leaving the adviser a clearer field in which to determine which specific plan to recommend to you.
A Lifetime Mortgage is a mortgage which does not require monthly repayments, although with some plans rather than roll up the interest you can opt to make monthly repayments if you wish.
You retain ownership of your home and interest on the loan is rolled up (compounded). The loan and the rolled-up interest is repaid by your estate when you either die or move into long term care. If you are part of a couple, the repayment is not made until the last remaining person living in the home either dies or moves into care, meaning that both you and your partner are free to live in your home for the rest of your lives.
What is Equity Release? The Home Reversion Plan.
A Home Reversion Plan allows you to access all or part of the value of your property while retaining the right to remain in your property, rent-free, for the rest of your life. With a Home Reversion product the provider will purchase all or part of your house taking into account your age and your health and will provide you with a tax free cash lump sum (or regular payments) and a lifetime lease, guaranteeing you the right to stay in your property rent-free for the rest of your life.
There is no day-to-day interference and no restrictions on treating the house exactly as before; as a private home to live in freely.
What is Equity Release? Get your answers here.