What is Equity Release?
Equity release is a way of releasing the wealth tied up in your property, without having to sell it and move to another home. You could choose to either borrow against the value of your home or sell all or part of it in exchange for a lump sum or regular monthly income. It may also be possible to take further monies from your property at a later date, if required.
Equity release is designed to help customers over the age of 55 who either own their property outright, or have small mortgages left to pay.
When taking out an Equity Release mortgage you need to consider the cost, fees/charges, tax implications, impact on state benefits of setting up an Equity Release mortgage
We will consider the following when determining the Equity Release scheme which is the most appropriate solution for you;
- The options of downsizing to release the money you need, or whether you want to release money from your property while staying in your current home.
- Whether you wish to service the interest each month (like a mortgage for over 55’s) or receive the money required now, but not service it so the interest rolls up (Equity Release)
- The proposed interest rate, fees and charges.
- Whether fixed early repayment charges are important to you.
- The importance of estate planning and the selection of a solution which offers an equity guarantee, or a means of paying the ongoing interest
- If you require the flexibility to take more cash in the future
- Solutions with a high loan to value, if you want to take the money now and again in the future
- Drawdown solutions that allow you to take an initial lump sum but with a facility to take more later.
Some reasons why an Equity Release Mortgage may be right for you;
- With a Lifetime Flexible Mortgage Plan you can borrow as little as £10,000 tax free and leave more funds in reserve for when you need it. Your property remains your own, you have just borrowed money against it.
- If you want to pay some of the money back in to the mortgage – some schemes will allow you to do this subject to their Terms and Conditions.
- If you don’t want to pay any money back, some schemes will allow you to do this. Like any borrowing, an interest rate is charged and any interest you choose to to pay is added to the mortgage amount.
- The interest rate payable is fixed for the life of the mortgage so you can be sure of what you are being charged.
- No matter how much you take with the plan, you will never owe more than the value of your property.
- You can never pass on any of the debt to your children.
- if you want to move to a different property, It may be possible to port the mortgage to a new property subject to the mortgage’s Terms and Conditions.
- It is possible to repay the full amount although this may incur an early repayment charge.
- You will own your own home, as with any other mortgage.
- A Solicitor of your choosing, will talk you through the terms and conditions in detail before you commit to anything.