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Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 tax-free cash?
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Our Most Commonly Asked Questions
An equity release could be a great way to help you live your later life to the full.
By borrowing a tax-free lump sum you could be able to fund improvements to your home, help younger family members get on the property ladder, or simply maintain your lifestyle in retirement.
How much you can borrow is based on a number of factors, including your age, the type of property you own, and its value.
Insert your information into our equity release calculator to find out how much equity you could access. Get equity release advice now & see how the latest plans perform.
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When comparing the market, a specialist adviser will explain:
- You have to get advice before releasing equity.
- Check for plans that have a guarantee so you can’t be liable for more than your house is worth.
- It reduces the value of your estate.
- The initial consultation is free.
- The most popular form is a lifetime mortgage, which is a loan secured against your home. Note that you will still own your home.
What is It?
You are property rich but cash tight. You’ve benefitted over the years from the increasing property prices, but without cashflow, you are severely limited in what you can do.
You’ve got time to do the things you’ve also wanted to do, but you can’t, because all of your money is tied up in your property.
Imagine that you could do that renovation, get that perfect car or go on that dream holiday.
There is a way…
and still stay in your property.
It’s called equity release, and it’s booming in the UK. You’ve seen it on the TV, heard about it on the radio, and you’re not the only one. Every 12 minutes, someone over 55 in the UK is releasing equity from their property. Let’s take a more in-depth look at what it is.
It’s a financial product that enables homeowners who are 55+ to unlock the value in their home by turning it into a lump sum or regular income.
Unlike traditional mortgages, with equity release schemes, you don’t have to make any monthly repayments, and they allow you to continue living in your residence until you pass away or move into permanent care. Only then is your plan customarily repaid from the sale proceeds of your home.
If you’re over the age of 55 and a homeowner, you’re almost certainly eligible. What you release isn’t taxable, and you have the financial freedom to use it on what you want – meaning you get to tour the world, give a living inheritance to your family and enjoy your golden years.
You’ve always waited for the moment to do what you want when you want. Now you can have the funds to do that. Is it safe though?
What are the Benefits?
Equity release is an ideal option for anyone looking to enhance their living standards after retirement, and here are some of the ins and outs.
1. It Offers You Financial Freedom
By taking out a scheme, you can choose to spend your money as you want. Whether you need to upgrade that kitchen, make home changes like adding new double glazing, loft & cavity wall insulation, a world tour, or to help your kids buy their first home, it’s all up to you.
What you receive is tax-free, and you can opt to take it as either a lump sum, as an income plan or in several smaller chunks (‘drawdown’) – thus giving you more flexibility.
2. It Does Not Require You to Downsize
You don’t get to experience the hassle, inconvenience, and expense of moving out of your treasured family home. It provides you the financial freedom you need but also the freedom of choice.
3. It Provides the ‘No Negative Guarantee’
It means that it protects you from having the debt due from being driven up by house price changes. Therefore, your beneficiaries cannot ever incur any debt over & above the market value once the mortgage holders die or move into permanent care.
What about the pitfalls?
Types of Schemes
Although there are many different plans available, they can all be split into a few core categories that you need to understand.
You release a lump sum from the value of your house, by taking out a mortgage secured on your house (provided it is your primary residence) whilst maintaining 100% ownership of your home. This, plus any interest accrued, (you can select to make repayments) is repaid from the sale of your house.
1. Drawdown Lifetime Mortgage
It provides you with a flexible facility from which you can take withdrawals as and when required. It is one of the most convenient plans because:
- It allows you to keep funds in a separate account, available for ‘drawdown.’
- The interest will not accrue on the funds in your reserve, till you opt to release it, thus enabling you to minimise the interest your scheme charges you.
- It gives you a safety net of a money you have access to whenever you need it.
Read More On » Drawdown
It is specific to one’s health and lifestyle issues. If you qualify, having this plan allows you to borrow more money and at a lower interest. In both cases, your life expectancy is used to calculate the maximum equity you can release, or what your lower interest rate will be.
Read More On » Enhanced
3. Interest Only
The preference for monthly repayment upturned the mechanics of traditional schemes. An interest only lifetime mortgage allows you to pay off a certain amount of interest every month, while also allowing you to maintain a level balance.
Through these repayments, you can manage the interest that will need to be repaid when the lender sells your home, making it a very convenient option.
Read More On » Interest-Only
4. Voluntary Repayment Plan
It is the most recent innovation, and allows ad-hoc repayments of interest and/or capital to maintain a level balance. It enables you to make payments of up to 15% of the amount borrowed each year (dependent on the plan) with no penalties.
Read More On » Voluntary Repayment
5. Lump Sum
If you are not interested in the drawdown plan and are looking to have a one-off release of equity, then this should be your go-to plan. It is, in essence, a core lifetime mortgage with minimal extra features, which on the whole, results in a lower interest rate.
Read More On » Lump Sum
6. Home Reversion
These shared ownership equity release schemes allow you to sell a portion of or your entire home to a plan provider, and in return, the home reversion companies offers you regular monthly payments, lump sum or a combination of both.
Read More » What is a Home Reversion Plan?
Make sure you find a plan that will work for you.
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What Can It be Used For?
You are free to use the money on almost anything you want. There are many reasons for releasing equity from your home and here are just a few of them.
- To supplement your pension income to cover living expenses
- To settle a repayment mortgage or clear the balance on an interest-only mortgage
- To improve your standard of living
- To see your family enjoy their inheritance while you are still here
- Top up your income in retirement
- To take that holiday of a lifetime
- To help your children onto the property ladder
- To pay off other outstanding debt and lower your monthly outgoings.
Use our calculator to see how much you can release now.
Is an Equity Release Right for Me?
Plans are not right for everyone and it is imperative that you fully consider & understand your options, and receive independent financial advice before you make a decision. It is also important that, if you do decide to use an equity release product, you select one that meets your needs.
Remember that taking it is generally a longer term option. However, there are flexible plans available that may fit your varying needs and some will allow you to repay in the future without any penalties. A financial adviser can help you find a plan that is regulated by the financial conduct authority and that will work for you.
Chat with an adviser to get the best equity release advice, answer all your questions, and see how much you can release now. Use our equity release calculator now.
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PS – If you’re anything like us, you just skipped to the end anyway.
So here’s the scoop – we are offering to get you the best quote for equity release from the best companies.
John advises business, individuals, and organisations on pension planning. As you’ve probably realised by now, we’re invested in helping people like yourself understand a little bit more about how equity release options work.