How old do I need to be?
For a lifetime mortgage, the youngest borrower will need to be aged 55 or over. For a home reversion plan, you will need to be at least 60.
Is there a minimum value my property needs to be to qualify for equity release?
Typically providers will specify a minimum property value of £75,000.
Why are the interest rates on equity release schemes higher than normal mortgages?
Equity release schemes differ greatly from a standard residential mortgage. With a standard residential mortgage that a homeowner is typically used to, a defined amount of money will be borrowed over a defined number of years, agreed at the beginning of the contract. The lender will also receive regular monthly payments, comprising of capital and interest, or interest-only.
With an equity release scheme, the lender may not be receiving any regularly monthly payments if debt is being rolled up. Significantly, the provider also has no guarantee as to when the borrowing will be repaid, this being dependent on the age of the borrower passing away or moving into long term care. Additionally, there are further costs for an equity release provider to consider, such as a no negative equity guarantee. Therefore, the costs involved with an equity release scheme are higher than that of a standard mortgage provider and they therefore charge higher interest rates.
Is equity release right for me?
Choosing equity release will affect you over the long term. You need to be happy with the arrangements and be confident that it suits your circumstances, both now and in the future. It is imperative you seek impartial mortgage advice from a qualified equity release specialist.
Before using an equity release scheme, you should consider all other options available to you. If you have investments or savings, you may wish to use these before considering a scheme. If you need to release equity but would consider living in a smaller house, downsizing could be an option. We live in an aging population and if you take out an equity release plan too early in life, you may not have enough value left in your home to move to another property later.
If you are looking to consolidate any debts you may have you should in the first instance take specialist advice or talk to your local Citizens Advice Bureau before entering into an equity release scheme.
Using the equity in your home will affect the amount you are able to leave as an inheritance so we strongly recommend that you discuss this with your family and/or the beneficiaries of your estate. It is also a good idea to make sure your Will reflects your decision to take out an equity release product.
Any lump sum or income you receive as a result of an equity release mortgage, may have an effect on any state benefits you receive. You should also remember that the rules on benefits could change in the future.
With a lifetime mortgage, you can usually repay the amount you owe at any time, although the lender may charge an early repayment fee. These can be expensive as equity release schemes are designed to be long term plans. If you have a home reversion plan, you may need to sell your share of the property in order to pay off the amount you owe to the equity release provider. Depending on the amount to be repaid, you may have little to no money left over.
Do you charge a fee?
All of our equity release advice is free of charge, enabling you to discover if it’s right for you without it costing you a penny, and without any obligation whatsoever.
Our advice process includes meetings with you – and often your family – to discuss your personal circumstances, in addition to researching the market so we can source the product which is right for you.
Should you wish to proceed we charge a fee of £995, which is only payable on completion.
Should our recommendation be a Retirement Interest Only mortgage, there will be no fee payable. Full details of our fee structure will be discussed with your adviser and is detailed in our Client Agreement.