Equity Release
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Equity Release - Intro
Income in retirement is a major problem for many. Few people have sufficient income to be able to enjoy the retirement that they looked forward to so much. One of the main reasons for this is that we are living longer. According to Spence and Partners, a firm of consulting actuaries, a man aged 65 can expect to live another 17 years and a woman of the same age another 20 years.
Equity release plans, which also go under the names of lifetime mortgages, home income plans or home reversion plans, are one way of releasing cash from your home to buy a new car, have a holiday, improve your home or just to make your day-to-day living more comfortable.
Equity Release - How does it work?
There are a range of different schemes but they all work on the same principle - they lend you part of your home's value in return for a share of the proceeds when you die. Usually you will need to be aged 60 or over and have no mortgage (or use the capital to pay off any existing mortgage). Your property must also be in reasonable condition.
Generally speaking, the older you are the higher the percentage value of your property that you'll be able to borrow (as the lender will have to wait less time to be repaid). You should take financial advice before proceeding and we can provide it to you. We charge no fee for an initial consultation.
Equity Release - some of the good features
- They can provide a lump sum (many thousands in most cases), an income, or both
- The tax released is tax-free, although the returns on any investment made with it may not be
- There is no need to move home
- You are guaranteed to be able to live in and enjoy your home until you die
- You can use the procceds to make gifts to your children/grandchildren if you wish and this may help to reduce your inheritance tax bill when you die
Equity Release - some of the bad features
- With home reversion plans you are giving up some or all of any future capital growth in the value of your property
- With lifetime mortgages you have a loan on which the interest in compounded each year until you die. It is possible that the loan might exceed the value of your property but not if you use a member of the SHIP (Safe Home Income Plans) group, which will write off any loan amount in excess of the property's value at the time of death.
- The income from home income plans is fixed at outset and its purchasing power will be eroded by inflation
Finding out more
Equity release isn't appropriate for everyone and you need to consider the alternative options. Expert independent advice is therefore important.
For a free initial consultion call us now on 02890 33 33 22 or fill in the general enquiry form on this website.
For more information on SHIP have a look at their website www.ship-ltd.org
Equity Release - Risk Warnings
- Equity Release may affect your entitlement to state benefits and will reduce the value of your estate
- In order to understand the features and risk you should ask for a personalised illustration for any form of equity release plan that you may be considering.