Many homeowners aged 55 and over could be sitting on a chunk of equity which is tied up in their homes.
However, with equity release they could access this cash, tax-free, to help them achieve their retirement goals.
Maybe you’re dreaming of a long-haul holiday of a lifetime, investing in a caravan to enjoy holidays in the UK, or want to make home or garden improvements?
What type of equity release is right for you?
A lifetime mortgage is by far the most popular type of plan and allows you to continue owning 100% of the home you love.
You can choose how you want to access the cash you unlock, whether that’s as a lump sum or over regular smaller instalments.
Plus, equity release plans don’t require any regular monthly repayments, meaning once you’ve repaid any existing mortgage, which is a condition of equity release, your committed monthly expenditure will reduce.
There are also other types of equity release plan which might be more suitable for your needs, such as a home reversion plan. This involves selling part of your home, but you can continue living in it rent-free until you die or move into long-term care.
It’s important that you take advice when considering equity release. A specialist broker can discuss all the options available to you, including what impact it could have on the size of your estate over time, as equity release will decrease this, and if your entitlement to current and future means‑tested benefits may be affected now or in the future.
How much could I unlock?
You may be able to borrow between £10,000 and 53% of your property’s value as tax-free cash.How much you can release depends on the age of the youngest homeowner, your property value (minimum £70,000) and your needs.
To get an accurate quotation you would need to speak to an advisor.
How does equity release work?
When you pass away or move into long-term care, your house is sold.
The loan, plus accrued interest, is paid off with the remaining money passing to your estate.
. As the interest accumulates the outstanding balance can equate to a substantial portion of the property’s value when it is sold, meaning equity is reduced.
There are plans that may allow you to make voluntary payments subject to certain limits. Early repayment charges may apply above a set value.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and will reduce the value of your estate and impact funding long-term care.
Advice is required before proceeding and to understand the features and risks ask for a personalised illustration.
Safeguard your loved ones
If you’re considering equity release, it’s important to discuss this with your family as it will impact the amount of inheritance you can leave.
With some equity release plans you can ring-fence a portion of your property’s future value, to guarantee inheritance to your family.
All plans that fall under the Equity Release Council’s standards have a no negative equity guarantee, meaning your estate will never owe more than your property is worth when it is sold.
Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.
We provide initial advice for free and without obligation. Only if your case completes would our advice fee of £1,895 be payable. Other lender and solicitor fees may apply.
READ MORE ON EQUITY RELEASE
If you’re hoping to learn a bit more equity release, here are some more of our handy guides and explainers for you to read:
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