Equity Release
We do not provide advice on equity release but can refer you for advice and guidance to one of our carefully chosen equity release partners
There are various types of plans available to homeowners aged 55 and over. With Lifetime Mortgages where the interest is rolled up, a loan is taken out on the property to provide a lump sum, an income or a combination of the two. No interest is payable until the home is sold, which could be when you and your partner have both died or gone into long-term care.
A Lifetime Mortgage with a drawdown facility allows you to take the cash in stages as it suits you. This can be useful as it gives flexibility and the reassurance that you can access further funds at some point in the future should you need them. Interest is also only charged on funds when they are drawn down.
A Home Reversion scheme lets you sell part or all of your home in return for a tax-free lump sum or a regular income and is normally available to homeowners aged 65 and over.
You will normally receive below a below market value for your property, as you retain the right to stay in your home rent-free until you die or move out permanently.
When this happens, your home will be sold and you or your estate will receive the value of your share. The value you receive will be the amount your home sold for, minus the share you sold to the equity release provider originally.
This means you’ll know exactly what percentage of your home’s value will be left to your estate on your death.
Professional advice is essential and equity release isn’t the right solution for everyone. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so you should involve your children and dependants from the outset
Think carefully before securing other debts against your home. Equity released from your home will be secured against it.
What Equity Release plans are avilable?
Lifetime mortgage
A lifetime mortgage allows you to release a lump sum of cash from the value of your property. There is no requirement to make regular monthly repayments as the amount that you have released, plus any interest, is repaid from the money made when the property is sold. Generally this is when you die, or move into long-term care.
Drawdown lifetime mortgage
This is similar to the standard lifetime mortgage. However, with the drawdown lifetime mortgage, you can access your money with more flexibility. Rather than just receiving a lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these plans can often prove to be more cost-effective.
Interest-only lifetime mortgage
This is like a standard lifetime mortgage. However, you make regular monthly repayments to reduce the effect on the value of your estate. Some plans allow you to make monthly repayments that are equal to or less than the amount of interest that is charged. The balance is paid off from the value of your estate once you have died or have moved into long-term care.
Home reversion plan
A home reversion is a plan only available to those aged 65 or over. This plan allows you to exchange the ownership of some or all of your property for a lump sum of cash, whilst retaining the right to stay in the property, free of charge, for as long as you live. This is also known as a ‘lifetime lease’. Because you can continue living in your home, rent-free, for life, you would generally receive an amount for your property that is lower than its market value.
Important Information
Money Sage operate a referral service for equity release and have chosen Age Partnership as their preferred provider although if required, introductions can be made to qualified solicitors and/or chartered financial planners.
The Age Partnership advisors will tell you everything you need to know about equity release
including the effect on the amount of inheritance you can leave and if your entitlement to means-tested benefits could be affected now or in the future. Equity release may involve a home reversion plan or a lifetime mortgage which is secured against your property. To understand the features and risks ask for your personalised illustration.
You only continue to own your own home with a lifetime mortgage which is secured against your property.
Only if you choose to proceed and your case completes would a typical fee of 1.95% of the amount released be payable (minimum £1,495). Equity release requires paying off any outstanding mortgage. Equity released, plus accrued interest to be repaid upon death or moving into long-term care.
Equiry Release Calculator
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How much equity could you release?
What next?
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