Frequently Asked Questions
All You Need to Know
It is important to understand that your circumstances are unique and what is right for one person may not be right for you. We will give advice and solutions personal to your own needs. Here are some of the questions that many people ask. If you have others, please contact us for expert advice.
What is Equity Release?
Equity release is a way of releasing the wealth tied up in your property without having to sell it and move to another home. You can either borrow against the value of your home or sell all or part of it in exchange for a lump sum or a regular monthly income. Some plans give you the option to “draw down” further equity (cash) at a later date, based on your requirements.
Usually you don’t have to make any repayments while you’re alive, interest ‘rolls up’ (unpaid interest is added to the loan). This means the debt can increase quite quickly over a period of time.
However, some lifetime mortgages do now offer you the option to pay all or some of the interest, and some let you pay off the interest and capital.
The loan or reversion sum will be repaid at a future date, when the property is sold.
Are there different types?
There are two equity release options:
Lifetime mortgage: you take out a mortgage secured on your property provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family. You can choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.
Home reversion: you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain 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.
We only give advice on Lifetime Mortgages.
What do people use equity release for?
Clear Debts - no more monthly repayments, use your income for more enjoyable things instead
Improve income - not everyone has an income in retirement that can cover everything
Pay for care - when your health needs start to hurt your pocket
Home improvements - get your home ready for your retirement
Buy a house - equity release can be used to buy a property, not just if you already have one
Pay off an existing mortgage - a useful way to clear a mortgage and the monthly repayments
Help your Family - be able to help financially if needed. Many children rely on the bank of mum and dad for house deposits.
Is Equity Release right for me?
If you are over 55 and own a property that is worth at least £70,000, then Equity Release is an option you can consider.
However, there may be alternatives to Equity Release that might suit your circumstances, such as:
Downsizing
A Conventional Mortgage
Unclaimed Benefits
Using Savings or Investments
Family and Friends
We will make sure that we understand your needs fully and will only recommend Equity Release if it is the most appropriate option and that you are fully aware of the potential risks and costs.
Always take expert independent advice.