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Facts You Should Know About Equity Release

The 10 Essential Equity Release Facts You Need to Know

Equity Release Can Help Homeowners Boost Their Retirement Income and Repay Other Debts. We Will Discuss 10 Facts About Equity Release and Why This Could Be a Great Option for You!

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10 facts you have to know about equity release
In this Article

Fact #1: Equity Release Is Regulated by the Government

Equity release is regulated by the Financial Conduct Authority (FCA)1with strict rules to ensure the protection of consumers.

Equity Release Is Regulated by the Government

Fact #2: With a Lifetime Mortgage, You Retain 100% Of Homeownership

With a lifetime mortgage, you retain the full ownership of your property.

You get to stay in your home and continue enjoying all it has to offer: security, stability, comfort and pride of owning a valuable asset that is increasing over time.

With a Lifetime Mortgage, You Retain 100% Of Homeownership

Fact #3: You Will Never Be in Debt More Than the Value of Your Property

You will never be in debt more than the value of your property.

If you sell your home and release equity, equity release providers cap repayments to no more than 25% or £50,000 whichever is greater than the sale price.

Equity Release Facts

Fact #4: The Cash Is Tax‑Free

You won’t not have to pay any Income Tax or Capital Gains Tax2 on the release of your equity.

 The Cash Is Tax‑Free

Fact #5: You Must Be at Least 55 Years Old to Release Equity Through Equity Release

However, there is no maximum age requirement and you can take out a lifetime mortgage from the day you buy your first property – even if that’s when you’re in your 50s or 60s!

You Must Be at Least 55 Years Old to Release Equity Through Equity Release

Fact #6: There Is a Minimum Home Value

Your home must be worth at least £150,000 to release equity – but in some cases, you can still access up to 60% of the value of your property.

home value

Fact #7: Lenders May Take Your Health and Lifestyle Into Account

Some lenders, such as the Equity Release Providers Association (ERPA), will consider your health and lifestyle when deciding what type of equity release to offer you.

 Lenders May Take Your Health and Lifestyle Into Account

Fact #8: The Interest Rate Can Be Fixed for Life

Some lenders, such as Equity Release Providers Association (ERPA) offer a Fixed Interest Rate3 for life.

So you’ll know what your monthly repayments will be and how much it costs to release equity from the day of purchase.

The Interest Rate Can Be Fixed for Life

Fact #9: The Debt Won’t Be Passed On

If you sell your property while still making repayments, the debt will not be passed on to the new buyer.

The Debt Won’t Be Passed On

Fact #10: A Solicitor of Your Choosing Will Talk You Through the Terms and Conditions

Once you’ve found the equity release that suits your needs, a solicitor of your choosing will talk to you about the terms and conditions.

 A Solicitor of Your Choosing Will Talk You Through the Terms and Conditions

Common Questions

Is Equity Release Safe?

What Is the Interest Rate on Equity Release?

How Much Equity Release Will I Be Able to Access?

What Happens if I Don't Keep Up With Repayments?

In Conclusion

Equity release is a way to unlock the value of your property without selling it or moving. It’s an alternative financial strategy that may be right for you if you have enough equity in your home and want to use this as collateral against a loan.

You can take out loans with fixed-term repayments, flexible repayment amounts, and interest rates based on age (i.e., 20% APR).

Whether you need money now or future income security, equity release could help free up cash flow by giving you access to funds from the sale price of your house while still living there.

Check out our article on Equity Release.

References

  • www.agepartnership.co.uk/media-centre/equity-release/10-facts-you-have-to-know-about-equity-release/
  • www.readersdigest.co.uk/money/equity-release/10-facts-that-will-answer-all-your-equity-release-questions
  • www.yourmoney.com/retirement/equity-release-10-points-consider-taking-leap/
  • www.lawskills.co.uk/articles/2015/10/advising-clients-on-equity-release/
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