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There’s no escaping the fact that some equity release schemes have had a bad reputation in the past. But in recent times, better standards being implemented by the Equity Release Council and stronger competition has led to a safer and securer way for older people to release funds tied up in their homes.
These days, equity release can be a perfect solution for anyone looking to renovate their property or help loved ones put down a deposit. But it’s important to know exactly what you’re entering into when doing so.
For more information, please contact George Wotton of Responsible Equity Release on 07391 532329.
What is equity release?
In short, equity release is a way that you can access the equity (money) tied up in your home.
There are several options when it comes to releasing equity. You can:
- Take the money you release as a lump sum.
- Take the money you release in several smaller payments.
- Combine taking a lump sum and smaller payments.
The option you choose depends entirely on what you want to do with the released equity. Therefore, there’s no right or wrong way of doing things.
Common reasons for releasing equity.
Some of the most common reasons that people look to release money from their home include:
- Paying off debts or a mortgage.
- Making home improvements.
- Having a more comfortable and financially stable life.
- Supporting family members that are struggling with their finances.
- Going on a luxury trip of a lifetime.
Am I eligible?
Some of the most common reasons that people look to release money from their home include:
- Paying off debts or a mortgage.
- Making home improvements.
- Having a more comfortable and financially stable life.
- Supporting family members that are struggling with their finances.
- Going on a luxury trip of a lifetime.
If you’re unsure whether you’re eligible, please contact George Wotton on 07391 532329.
How does equity release work?
When considering equity release, you have two options which are as follows:
1. Lifetime mortgage
A lifetime mortgage is the most common form of equity release, which is where you take out a mortgage against your property, providing that the property is your primary residence.
If you opt for a lifetime mortgage, you have two repayment options. The first option is to make regular repayments which helps keep interest low. The other repayment option is for the outstanding amount to be paid from the proceeds of the sale of the property. The repayment method you choose depends on your personal preference, as both repayment methods have their advantages and disadvantages.
The maximum amount that you can borrow through a lifetime mortgage is 60% of the value of the property. However, it’s important to note that the amount you can release depends on factors such as your age and the value of your property.
2. Home reversion.
The second option is home reversion. Home reversion is where you sell either part or all of your property for a lump sum or regular payments. In a circumstance where the property is sold, the home revision company will claim their share from the proceeds of the property.
Is it a good idea?
Whether equity release is a good idea depends entirely on your specific circumstances. Below, George has weighed out the advantages and considerations to help you determine whether it’s the right option for you.
Advantages:
- You release money otherwise held up in your home.
- You can remain living in your home.
- There are no requirements to make any payments until you pass away or enter long-term care.
- You can choose to pay off the loan early.
- Inheritance tax liability might be reduced.
Considerations:
- If you decide to pay all or part of the loan early, there may be an early repayment charge.
- Releasing your equity will reduce the value of your estate.
- Releasing equity can impact your current and future eligibility for means-tested benefits.
- Unless your estate has other means to clear the amount owed, you won’t be able to pass on the total worth of your property as an inheritance. In a circumstance where you pass away, your property will be sold to pay off the lifetime mortgage or provide the reversion company with their entitled share of the proceeds.
- You can’t take any other loans out against your home after you release equity. With a lifetime mortgage, however, there may be opportunities for further advances.
- If you have chosen the lifetime mortgage option, you run the risk of owing far more than you borrowed due to the effect of compounding interest. In a circumstance where you don’t make regular repayments before you pass away, the owed amount will no longer affect you. However, it will reduce the amount of inheritance you leave behind for your beneficiaries.
Equity release calculator.
When calculating how much equity you can release from your property, the amount depends on factors such as your age and property value. Below you can calculate how much equity release you can unlock.
Calculate Now
Releasing equity from your home.
To release equity from your home, you will need to advance through the following four stages, which are:
1. Take advice first
Consulting with a professional, like George, who specialises in equity release is the recommended first step. Receiving qualified advice is required before you can release equity from your home, so by consulting with a professional early, you can better make an informed decision and avoid costly mistakes.
2. Consider your alternatives
There are alternatives, which are always worth considering before making any big decisions. One common alternative available is downsizing. Only after assessing your alternative options can you decide on your best option. George will be able to help you compare some of your other options against a lifetime mortgage.
3. Lifetime mortgage or home reversion?
Suppose you have decided that equity release is the right decision for you. In that case, the next step is to choose between a lifetime mortgage and a home reversion scheme. Factors that may play a part include how much you’re looking to leave your family as an inheritance. George will only offer advice on lifetime mortgages.
4. Independent legal advice
Approaching a solicitor for independent legal advice on an equity release agreement is another requirement of the process. The solicitor will clearly outline all terms and conditions of the agreement before you sign and commit to the scheme, to make sure that you understand what you’re entering into.
Why contact George Wotton and Responsible Equity Release?
If you want to release equity from your property, it’s essential to get advice from a professional to avoid potentially costly mistakes. Taking a free initial meeting with George Wotton will guarantee the following:
- Time to discuss whether it’s a suitable route for you with an adviser who is a member of the Equity Release Council.
- A clear explanation of how it works and what the impact is on you and your loved ones.
- An outline of any viable alternatives which are available to you.
- A personalised illustration, laying out the features and costs of releasing equity with a lifetime mortgage.
- A recommendation on the best route for your situation.
To contact George Wotton, please visit his webpage, send him an email at [email protected] or give him a call on 07391 532329.
Furthermore, if you’re looking for a solicitor to provide independent legal advice on an equity release agreement, please contact our solicitors on 020 3007 5500.
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