Equity Release

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits

What is Equity Release?

For clients over the age of 55 who are considering releasing money from your home, equity release could provide you with the option to boost your finances. With guidance from our expert advisor, you will be under no obligation to proceed and we welcome any questions you may have.

If you’ve owned your home for a number of years then you may have built up some equity. Releasing that equity is a way of raising money secured against your current home that can be used for any purpose, whilst maintaining full rights to reside in your property for the rest of your life.

Our expert, qualified advisor can guide you through the process under no obligation to identify whether Equity Release is the most appropriate option for you.

Equity Release can be used for plans such as:

  • Home improvements
  • Holidays
  • A new car
  • Debt consolidation
  • Gifted money to children or grandchildren

How does it work?

Releasing equity from your property is a big decision and one that should be researched thoroughly. Our qualified, dedicated advisor is here to outline the options you have available with Equity Release. Your current circumstances and requirements will be assessed to ensure we establish the most suitable solution for you and our recommendations will be tailored to you and your personal needs.

To qualify for equity release you must be over the age of 55 and currently own your property you are looking to release equity from.

There are a number of Equity Release plans we can offer advice and guidance on:

Lifetime Mortgages:

A lifetime mortgage is a long term loan secured against your property, providing the options to withdraw a sum of money for your own personal use. You will retain full ownership of your home with the right to reside there for life or until you potentially go into long term care.

This plan allows you to take a cash lump sum of the equity for personal use; there are no restrictions on what you use this money for. Interest would then be charged on this cash lump sum and added to the loan, this is called compounded interest and the full loan plus the interest would be repaid when the plan comes to an end or the property is sold. There are no monthly payments with a lifetime mortgage so you don’t have to worry about any additional monthly outgoings.

With a lifetime mortgage you also have the option to drawdown money from the equity in your home in stages instead of a full lump sum. You would then only be charged interest on the amounts you drawdown, saving you money over the lifetime of the plan. This option allows you the freedom to release money when it is required, instead of withdrawing a large sum at the very start. This could come in handy should you only need a small amount for a new car or a holiday, leaving the rest of the equity in your facility with the provider.

Top tips to consider with a Lifetime Mortgage:

  • You retain full ownership of your property
  • Interest is charged is added to the loan resulting in no monthly payments
  • Some lenders allow you the option to repay up 10% of the initial loan amount annually with no penalties should you wish
  • The money can be used for any purpose
  • Discuss this option with your family
  • Explore alternative financial solutions
  • Seek professional advice from our advisor before considering a Lifetime Mortgage

Our advisor will assess your requirements and advise on the options available, a personalised illustration will then be provided by our advisor to outline the features and risk of a lifetime mortgage. For additional information please contact us directly to answer any questions you may have.

Home Reversion Plan:

A home reversion plan is very different to a lifetime mortgage and we are here to help identify those key difference. Our advisor will help guide you through the positives and negatives and answer any questions you may have.

A home reversion plan involves selling all or part of your property to the provider in exchange for a cash lump sum. This option means that you will not retain ownership of either all or part of your property, the provider however would lease the proportion of your home back to you. You have the right to remain in your home for as long as you wish.

With a home reversion plan there is no worry of interest rates because your share of the property you have sold to the provider will never change. You could sell 50% of your property and still retain the remaining 50% ownership, which would ensure your estate would receive 50% of the proceeds of the sale when you move or pass away.

There are no monthly costs and you would receive a cash lump sum at the start of this plan to be used for any purpose. It is important to consider this option with family members as you would be selling a proportion of your home at below market value, and in turn reducing the value of your estate.

Top tips to consider with a Home Reversion Plan:

  • There are no monthly costs to pay and no interest to pay
  • The money can be used for any purpose
  • You will no longer own 100% of your property
  • You would be reducing the value of your estate when considering inheritance
  • The percentage of your home could potentially be sold to the provider below market value
  • Your percentage of your home would benefit from increased house prices
  • Discuss this option with your family
  • Explore alternative financial solutions
  • Seek professional advice from our advisor before considering a Home Reversion Plan

Our advisor will assess your requirements and advise on the options available, a personalised illustration will then be provided by our advisor to outline the features and risk of a lifetime mortgage. For additional information please contact us directly to answer any questions you may have.

Interest only retirement mortgage:

An interest only retirement mortgage is different to the previous equity release plans mentioned in that they are very similar to a conventional residential mortgage.

Interest only retirement mortgages are aimed at individuals who want to release equity from their property, but who also want to repay the interest on a monthly basis. This requires evidence of repayment options via pension income or retirement income. Similar to a conventional mortgage, it is important that you keep up with your monthly payments to the provider. Failure to do so may result in the provider repossessing your property. The capital loan will need to be repaid in full at the end of the term.

The amount you can borrow against your home is based on your ability to repay the interest on a monthly basis, taking into account your current monthly expenditure. The capital loan must be repaid at the end of the term agreed; this can be done with either the sale of the property, sale of other assets or cash lump sum injection.

You will still retain ownership of 100% of your property and you can repay the capital loan at any point throughout your mortgage, you may be subject to repayment charges however with some providers if you choose a fixed rate product. Standard variable rate (SVR) products are also available which would result in potential fluctuations in your monthly payments. Our advisor will assess your requirements and tailor the advice and recommendations to you, ensuring the product is suitable for your future plans.

Top tips to consider with an Interest Only Retirement Mortgage:

  • You will retain 100% ownership of your property
  • You will need to provide proof of pension income or retirement income to identify the source of monthly repayments
  • The term of the loan is based on the youngest borrowers age and some providers will lend up to their 95th birthday
  • An interest only retirement mortgage helps to keep costs down by servicing the interest throughout the term of the loan
  • You will only be repaying the interest on a monthly basis
  • You will require a repayment strategy at the end of the term, this can be via the sale of the property, sale of another asset or a cash lump sum payment
  • How much you can borrow is based on an assessment of your ability to afford the loan via income
  • Explore alternative financial solutions
  • Seek professional advice from our advisor before considering an Interest Only Retirement Mortgage