THERE are pros and cons of equity release but let’s look firstly at the pros, but, firstly, here’s a quick reminder as to what is equity release?
Equity Release is a financial product used by people who are aged 55 plus to release cash which is locked up in their homes. It is a bit like a mortgage except the lender is paid back when the property is sold which is usually when the owner passes away or if the owner sells the property to move into long term care accommodation.
It is a big decision and there are two main schemes to choose from – lifetime mortgages and home reversion plans, so, this is where your independent financial adviser will be crucial in advising you which option is best for your circumstances.
A lifetime or equity release mortgage is a type of loan secured against your home and means you retain ownership of it. In contrast, a home reversion scheme involves you selling all or part of your home to a home reversion company.
Each of these schemes has different properties which make them more or less suitable for you, depending on your individual circumstances. Your independent adviser at Worldwide Financial Planning will help you assess which will be the best for you in terms of the benefits each one offers and the costs.
An Equity Release scheme, which is regulated by the Financial Conduct Authority (FCA), is a safe way for you to access some of the cash which is tied up in your home. It is tax free and you can decide whether or not to take it as a lump sum or you can choose to get it in instalments.
There are many reasons why people decide to release equity from their property. You might want the money to go on the cruise you always promised yourself, pay for home improvements, help family or pay off an outstanding debt for example.
There are benefits of choosing a lifetime mortgage and also choosing the home reversion plan.
If you choose to go down the ‘lifetime mortgage’ route;
- you will be able to borrow against your property and continue to live there
- you have an option to move house and transfer your equity release to your new property at the lenders’ discretion. It’s not a guaranteed option of all products
- you will not have to make repayments of capital or interest unless you want to
- you will benefit if your property value increases
- you will never owe more than the value of your home
If you decide to go for a Home Reversion Plan;
- you will be able to borrow money against your property and continue to live there
- you might be able to consider borrowing even more money with the home reversion plan as opposed to the Lifetime Mortgage option
- you may also be able to access more money if your property value increases
If you are considering Equity Release, our award winning independent advisers will make arranging equity release as fast and as straightforward as possible. As soon as you contact us we will appoint you with your own independent mortgage adviser. Simply email info@wwfp.net and we can begin the process of helping you.