SPECIALISTS IN EQUITY RELEASE IN LONDON AND neighbouring areas
Have you heard people talking about equity release and are curious to learn more about it? Did you know that home owners aged over 55 are able to free cash from their home to spend on anything from new cars, kitchens and holiday homes, to helping their children secure a home of their own. Are you interested in making your property work for you but unsure where to start?
We have a team of professional staff who are experts on the property scene in London and surrounding areas. They are waiting to answer your questions and supply up to date information with no obligation to take things further, so why not contact us today for a chat?
Get in touch in confidence and with confidence – whatever stage of the process you are at.
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EQUITY RELEASE
What does ‘equity release’ mean?
Once mortgage free, [or close to it], most people find their home is their biggest asset. It’s worth a lot of money and it’s yours, at least on paper. However, how can you access this goldmine? You can’t sell as buying a replacement home would simply absorb the capital, so most people spend many years sitting on a huge amount of equity which they think cannot be touched in their lifetime. Happily there is a reasonable solution, as opting for an equity release scheme allows you to stay in your property but also to free up money which you can use on anything you choose.
Do you quality for an equity release scheme?
If the home owners are aged over 55 years at the time of application, and the property has more than £70,000 equity you may well be eligible.
Does the term ‘equity release’ refer to just one type of scheme?
No. Although often used as a blanket term, technically equity release refers to several different schemes which share the same goal, but approach it in different ways. Some pay a one-time lump sum, others provide regular payments, or even allow you to take cash up to the agreed amount as and when you need it. Making the best choice for your personal circumstances is crucial, which is why you should always get plenty of information and advice from equity release specialists before making a final decision.
A brief look at types of equity release schemes
These are the two approaches you will first choose between:
- A lifetime mortgage – you free equity by re-mortgaging part of your home with the option to defer all payments until the death of the final named homeowner.
- A home reversion scheme – in this case you sell all or just a section of your home to the person financing the deal but continue to live in the property as before. No payments are due on the money awarded until the house is sold following your death.7
More about LIFETIME MORTGAGES
This is the most popular type of equity release scheme, and it offers the choice of paying absolutely nothing off the loan until you die, or paying back the interest, and even some of the capital too, if you prefer that. If you choose to pay nothing the interest can add up, especially if you live for a long time afterwards. This doesn’t affect you personally of course, as the entire debt will be paid back once you pass on and the property is sold.
Taking the equity without having anything to pay back in your lifetime provides many people with true peace of mind, and the extra costs down the line are considered worth it. On the other hand the option of making some form of repayment does help reserve more cash for inheritance purposes.
Key points to remember about lifetime mortgages
- Most equity release companies have minimum age requirements, and this is often 55 years.
- You can’t borrow against 100% of the equity in your property. The ceiling is generally around 60%, but less may be released depending on how old you are, and how much your home is worth.
- Make sure any scheme you sign up for protects against negative equity.
- You can live in your property until the end of your life, or until you have no choice but to go into residential care.
- There are special rules about interest rates to protect you. They must be either fixed rate throughout, or a definite cap must be in place to give borrowers the security of boundaries.
- You can choose to take the cash as a lump sum, or in smaller portions just as you need or want to. The latter option reduces the amount of interest paid in the final tally.
- You can choose to keep some of the equity safe to guarantee an inheritance for your family.
More about HOME REVERSION
This route involves you selling all or part of your home to a company, which then pays you either a lump sum, or in installments if that is your preference.
Key points to remember about home reversion plans
- In most cases you cannot apply for a home reversion plan until you are at least 60, or even 65 years old.
- The equity released is generally less than a lifetime mortgage, usually falling between 20 – 60% of the portion you choose to let go.
- Your right to remain in the property for the rest of your life should be guaranteed.
- Always double check there is no penalty if your final debt outweighs the money raised from selling the property.
- Make sure you understand the amount of maintenance the lending company expects you to carry out, and how often they will visit to check your property is in good order.
- It is possible to hold back a percentage of the property value to pass on to your heirs.
IMPORTANT THING YOU MUST UNDERSTAND ABOUT EQUITY RELEASE SCHEMES
While the idea of being able to live in your family home for the rest of your life, while being able to access the equity it holds is attractive, it is important to be aware of all the facts before making a final decision.
- If you are receiving certain state benefits they may be affected by the cash you get from an equity release scheme.
- The value placed on your home will, in most cases, be much lower than a regular sale would bring.
- There will be fees to the company organizing your equity release so you need to remember to factor them in.
- A lifetime mortgage will generally have a higher interest rate than a standard mortgage would.
- There may be much less cash for family to inherit than they expect, so it is a good idea to let them know what you are doing.
- Consider all options and take your time before making a definite decision as it can be complicated to backpedal once the wheels are in motion. You may also have to pay a penalty for breaking the contract.
- Lifetime mortgages have fixed interest rates.
Want to know more about equity release schemes?
Simply fill in the contact form on our home page and a team member will get in touch very soon for a chat
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