What is Equity Release

We are here to advise and recommend a solution which is best suited to your circumstances. We always ensure that our clients are 100% confident that they understand Equity Release before they go ahead with it. If this takes multiple meetings and phone calls we’re more than happy to oblige.

There are two types of Equity Release: A Lifetime Mortgage and a Home Reversion. We mainly recommend Lifetime Mortgages but can advise on Home Reversions.

A Lifetime Mortgage

A Lifetime Mortgage is a type of mortgage whereby you release funds from your property in the form of Equity. It is targeted at homeowners over the age of 55 who might find it difficult securing or taking on a standard mortgage, or perhaps don’t have the income to make regular payments. Like a standard mortgage, different lenders offer different loan to values (LTV’s) – the higher the LTV, the more money you can get out of your property. Unlike a standard mortgage, you can choose to forgo monthly payments each month which will ‘roll-up’ any interest. When you pass away or go into long term care, any outstanding debt to the lender will be repaid via sale of the property, and the remaining funds will go to your beneficiaries.

You can either apply for a “lump sum” amount for a specific need/s. This is when you take out a set amount and don’t have plans to withdraw any further funds.

Alternatively, you can apply for a ‘drawdown’ option. You will have the initial “lump sum” upfront, but you can access further funds in the future without having to go through the application process again. The ‘drawdown’ facility is popular, and it gives people the confidence that they still have funds to rely on in the future, if needed. Interest is only paid on the amount that is released. We always ask you to do a ‘shopping list’ on what you want/require the funds for as we wouldn’t advise releasing as much as you can if there is no real need for the funds. It can also cost more in the long run in terms of interest rates if you go for the maximum amount.

If you choose to ‘roll-up’ the interest on your loan, then you will be provided with a table of how much the outstanding amount will total up to at the end of every year. Obviously, death isn’t planned nor timed, but we can show you how much in total it’ll cost over a specified amount of years, so you can then work out how much equity will remain for your beneficiaries.

Any fixed interest rate we secure for you will be fixed for life, so you don’t have to worry about any interest rate increases.

Home Reversion Schemes

Home Reversion Schemes are not as common as a Lifetime Mortgage. Whilst we can advise on this type of Equity Release, the circumstances that make this an appropriate scheme are less common, so we will always look into the Lifetime Mortgage first. A Home Reversion allows you to sell your home, or a part of it, to a home reversion provider. You will then receive a lump sum or regular payments based on a percentage of the property’s market value. You also have the right to remain in your property and this is typically only available to people aged over 60 or 65. There is no day-to-day interference and no restrictions, and you treat your space the way you always have, as a private home to live in freely. The percentage you retain in your property 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.

Considerations

Within these two definitions, there are many different options available, and it is important that your current and future needs are assessed so that you can be advised as to which is the right type of equity release plan for you.

We can also help you to establish how taking out a Lifetime Mortgage or a Home Reversion Plan might affect your tax position, your eligibility for means-tested benefits or your ability to move or sell your property.

There are advantages and disadvantages in both types of plans, and our advisers will explain these to you. If you would like your family to be involved, we can also – with your permission – answer any questions that they may have.

Our objective is to ensure we choose the best plan to fit your needs.
You will be given a personalised illustration on the product you choose to go ahead with; this will include all features and risks. We will go through this with you in our appointments before we submit any application for you.

One of the most important things to look out for when considering equity release advice is the Equity Release Council logo. Approved members of the Equity Release Council, such as Acclaimed Mortgage Consultancy Ltd, are able to display this logo and shows that they are committed to the Councils Code of Conduct, full details of which can be found at www.equityreleasecouncil.com.

If this may sound like something you’re interested in or you simply have more questions on, please make use of our live chat, call us on 01676 533 658 or request a call back here. Alternatively, you can contact our Equity Release specialists directly via email at sandy@mortgage-consultancy.co.uk.

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Learn more about Equity Release

Why use Equity Release

Equity Release can be used in a variety of different ways and can be helpful for over 55’s to provide an income if needed. Learn more about the potential benefits.

What are Equity Release Mortgages

There are now various types of equity release schemes; choosing the right one is absolutely crucial. Learn more about which may be best for you.

Is Equity Release right for you?

Equity release is not always suitable for everyone. We will explain if we feel that equity release is not the right option for you and how equity release works. Learn more about your options.

Call us today to discuss your needs or send us your enquiry