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What is equity release?
Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.
Equity release options
There are two equity release options:
Lifetime mortgage: you take out a mortgage secured on your property provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family. You can choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.
Home reversion: you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.
*WE DO NOT GIVE ADVICE ON HOME REVERSION PRODUCTS
Frequently asked questions
How much can I release?
This will vary depending on your individual circumstances, your age, the value of your property and which type of equity release plan you apply for. Older customers are usually able to release more equity.
What is the interest rate?
The interest rate will depend on the rates available at the time you take out the plan, fixed and variable rates are available and also fixed rates for the entire life on the mortgage.
Do I need to involve my family when making a decision?
Whilst not a requirement, we do feel it is important to discuss your plans with your family and family members are encouraged to attend any meetings with the equity release adviser.
Will this affect my tax position or my entitlement to certain state benefits?
The good news is that any cash released from your home is tax-free, however it may affect your entitlement to state benefits. It is important that you discuss these matters with your equity release adviser.
Do I still own my home?
Yes, and you can continue to live in it until you and your partner, in the case of a joint application, pass away or need to move into permanent long-term care. You will need to ensure that you maintain the property in a good condition. It’s also your responsibility to insure your home and pay all your property-related bills, such as gas, electric and council tax.
Can I move?
Most Lifetime mortgages are portable, which means that you will be able to move and take the plan with you if you so choose in the future, subject to lender terms and conditions.
Can I end the plan early?
Yes, but there may be an early repayment charge. Lifetime mortgages are long term products designed to enable the homeowner to release equity whilst remaining in their property. There are other types of later life lending available that may accommodate your circumstances more appropriately if it is known that your circumstances are likely to change in the future. Your equity release adviser will be happy to discuss this with you.
Do I need to make any payments?
Some products allow for interest payments to be made, others add the interest to the loan on a compound basis.
How is my lifetime mortgage repaid?
The loan will be repaid when your home is sold, usually following your death or your move into permanent long-term care.
Can I leave an inheritance?
Yes, some products allow you to build in an amount to leave as inheritance.