Get the facts on equity release – releasing the cash from your home!
Equity release is extremely popular, with a staggering £1.61 billion released from homes last year*.
Equity release has changed and evolved considerably in recent years. There are new providers who have entered the market, which has increased the range of products on offer. So, if you are considering equity release as a way to boost your finances, here are some facts you really should know:
What is equity release?
Equity release is a way to access some of the cash locked in your home. The money you release can be spent in any way you choose, whether on home improvements, an exotic holiday or treating your loved ones. There are typically no monthly repayments to make as the full amount owed is designed to be paid from the sale of your home when both you and your partner die, or move into long-term care.
Who is equity release for?
Equity release is typically available to those who are aged between 55-95 years who own a property worth at least £60,000.
What if I have an outstanding mortgage?
You can still qualify for equity release even if you have an existing mortgage, as long as you use the released funds to pay this off first. Equity release is increasingly being seen as something of a lifeline to those struggling to pay off their interest only mortgage.
How safe is equity release?
Equity release is fully regulated by the Financial Conduct Authority. When looking for an equity release plan you should ensure the providers are members of the Equity Release Council. These members will provide you with extra safeguards such as the no negative equity guarantee. This ensures that regardless of what happens to house prices, when your equity release plan comes to an end, you will never owe more than the value of your home.
All equity release sales must be accompanied by advice. It is important to obtain advice from a specialist in equity release, who will ensure you are made fully aware of the costs involved, and what taking out a plan means for you and your family. They will also explain how equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.
Will I still own my home?
With a lifetime mortgage; this is the most popular type of equity release – your home remains your own. You will have the right to continue living there for as long as you choose, or you are free to move home at any time in the future, and even take the plan with you (subject to provider criteria). Just like a traditional mortgage, a lifetime mortgage is a loan secured against your property.
Can I involve my family?
Yes, an equity release will affect the inheritance you leave, so it is important to include your family in the decision-making process. Our advisers will actively encourage you to involve your family in the entire process including making them welcome to attend your meetings with us.
How much will it cost?
Average lifetime mortgage interest rates are lower than they were a year ago, and this rate will be fixed for the lifetime of the loan so you know exactly what it will cost.
By taking advice from specialist means you will have full access to the best equity release deals across the whole of the market, and detailed explanation of any other costs that are involved, such as solicitor’s fees, valuation fees and adviser fees. You will be provided with an illustration detailing all of the costs involved, ensuring you are fully aware of what the plan will cost you before you commit to going ahead.
How do I find out more?
You can find our more by contacting Turnberry Financial Planning today to arrange a no-obligation consultation, call 01604 636279or email on enquiries@turnberryfp.co.uk.
*Equity Release Council, Jan 2016.
