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Did You Know? Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 tax-free cash.
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Got Questions? Check These First
What's a Refinance?
Refinance is a way of releasing the wealth (cash) tied up in your house without the need to move.
With these release products, if you are over 55 years old, you can either borrow against the value of your home or sell all or part of it for a monthly payment, a lump sum, or a combination of these options.
How Does a Refinance Work?
When comparing the refinance market, a specialist adviser will explain:
- You have to get advice before getting any plan.
- Check for schemes that have a no negative equity
guarantee, so you will never be in debt more than your home’s value.
- It reduces the value of your estate.
- The initial consultation is free with no obligation.
- The most popular form is a life-time mortgage, which is a loan secured against your home. Note that you will still own your home.
Is it Worth it to Refinance?
A refinance could be a great way to help you enjoy your life to the fullest.
By borrowing a nontaxable lump sum you could be able to fund home improvements, help younger family members get on the property ladder, or simply sustain your lifestyle in retirement.
How much you can borrow depends on a number of factors, how old you are, the type of asset you own, and its value.
Use our Refinance Calculator to find out how much you could release.
What are the Pitfalls of Refinance Scheme?
Refinance scheme is not right for everyone and it’s important that you fully consider your alternatives and receive financial advice before making a decision. It’s also important that, if you do decide to use a refinance product, you pick one that meets your needs.
Remember that taking a plan is generally a long term options. However, there are flexible schemes 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 pick what is right for you.
What are the Different Types of Equity Release Schemes?
Although there are many different schemes available, they can all be split into four categories.
Lifetime Mortgage Loan
You release a lump sum from the value of your house, by taking out a mortgage4
set on it (provided it’s your primary residence) whilst retaining 100% ownership of your home. This amount, plus any interest accrued, (you can opt to make repayments) is repaid from homes’ sale when you pass away or move into long-term care.
Drawdown Lifetime Mortgage
This works similar to the other scheme but with a cash reserve/draw down options allowing you to withdraw amounts at a frequency you like up to a specified amount of years, or until the cash reserve has been used up.
Interest-Only Lifetime Mortgage
You get a lump sum and pay a monthly interest on the loan, which can be fixed or variable, rather than allowing the interest to roll up. The amount you originally borrowed is normally repaid when your home is eventually sold.
Home Reversion Plan
Here, you retail some or all of your house to a home reversion provider in exchange for a lump sum of money or regular payments, whilst retaining the right to keep residing in your home, no rental fee , for as long as you live, but you have to agree to preserve and insure it. At the end of the plan your home is sold and the sale proceeds are shared according to the remaining proportions of ownership.
What can Equity Release be Used For?
You are free to use the money on almost anything you choose. There are many reasons for releasing equity from your home and here are 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 lifestyle
- To see your families enjoy their inheritance while you’re still here
- To carry out some home renovations
- To take that holiday you deserve
- To help your children onto the property ladder
- To pay off other outstanding debt and lower your monthly outgoings.
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