YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Do you need to release equity form your home to help pay for long term care bills, a new car or perhaps a family holiday?
Equity release allows you to release some of the money tied up in your home without you having to move. It is typically only available to you if you are over 55 and own your own home outright (without a loan secured on it).
Our Quick Guide To Equity Release
Equity Release can be appealing if you are asset-rich but cash-poor, as it essentially involves converting your home, which is probably your highest-value asset, into a new source of regular income.
There are two types of equity schemes; lifetime mortgages and home reversion. The amount you can borrow depends on your age and the value of your home. Typically the older you are the more you can borrow.
A lifetime mortgage allows you to borrow money as a lump sum, monthly income or both. You do not need to sell any legal ownership rights to your house. The loan is secured against your home and paid back, along with the interest, from the proceeds from the sale of the property after you die.
A home reversion plan is selling your home or a percentage of it in return for a lump sum of money, a monthly income, or both. Your home gets sold to a reversion company, and you become a tenant in your own home responsible for maintaining it and paying bills.
Choosing Equity Release
Choosing to release equity from your home is a big decision. We recommend you talk it through with your family. You should get advice from a FCA-regulated broker and get advice to see if you have any alternative options.
For example, if you’re struggling to cope with your property, you might want to consider moving to a small home instead? A financial adviser will be able to explore all the options available to you and give you the advice that will help find the right solution for you.
The Equity Release Council has set a code of conduct to help you get peace of mind over the transaction and includes the Safe Home Income Plans (SHIP) guidelines for providers.
It means the Equity Release provider undertakes that you have the right for you to live in your property for life, and the freedom to move to an alternative property without penalties, among other rights like being able to choose your own solicitor to review the documents, which must be ‘fair, simple and complete’. The standards include if your house should decrease in value, your estate will not be required to repay any additional debt after your death.
Equity Release may involve a lifetime mortgage or home reversion plan. To understand the features and risks please ask for a personalised illustration.