Equity Release

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Making the most of your assets

Are you aged 55 or over? If so, you could benefit from equity release.

If you’re feeling strapped for cash but have limited savings, or if you’re looking for a way to make money without having to remortgage your home, an equity release mortgage could be a great way to help you to kick back and enjoy your retirement.

What is equity release?

Let’s start by explaining the term ‘equity’.

Essentially, equity means the total of your current market value. In housing terms this means the proportion of your property which you own – not including the cost which you still need to repay on your mortgage.

For example, if the value of your house is £350,000 and you still have £125,000 left on your mortgage repayments, the total equity is £225,000.

Equity release is a broad term given to the process of receiving a lump sum of cash in exchange for selling shares of your property. It’s an increasingly popular way of boosting finances by releasing a tax-free loan which is secured on your home whilst you still live in it.

How does Equity Release work?

Equity release products are designed for the over 55’s looking to acquire funds through a lender who will then own a share of your property.

There are different types of equity release you should become familiar with. The four different types of Equity Release Plans are:

  • Lump sum lifetime mortgages
  • Lifetime mortgage with flexible ‘drawdown’ cash release.
  • Interest-only lifetime mortgages
  • Home reversion plans

Is equity release right for me?

If you’re a retired homeowner with a house that is increasing in market value, then an equity release plan could be a way for you to reap some of the profits you might otherwise not be able to take advantage of.

From clearing mortgages to supplemented income, the financial benefits of equity release, given the right person, is endless.

You may be eligible to release an amount of tax free cash based on factors such as your age, your property value and the maximum equity percentages offered by the major equity release providers.

Equity Release Plans can vary as they offer different benefits, therefore it is important to have chat with one of our advisors who specialises in the Equity Release Market.

You will need to pay any secured loans within the equity release timeframe.

What are the risks of an Equity Release Plan?

Although this may sound very tempting at first thought, it is important to carefully consider an Equity Release Plan because it will not be suitable for everyone.

There are many factors which you should be aware of before signing up to this plan, such as:

  • If you are in receipt of state benefits, you should be aware that an Equity Release Plan may affect your benefits and reduce the value of your estate.
  • Interest rates and charges.
  • Legal costs
  • When taking into account the above points, you may not benefit from an Equity Release Plan, the same way in which you would if you sold your house outright.

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