Home Income Plans
Home Income Plans
Home income plans enable homeowners and mortgage payers to benefit from the rise in the value of their property by releasing equity that has been built up.
Many homeowners and mortgage payers, especially if they have not increased their mortgage for a number of years, find that their house is worth considerably more than the value of their outstanding mortgage. By tapping into this reserve of capital, it is possible for people to increase their overall level of income and continue to live in their home, which for many people is a main priority.
The most popular form of home income plan generally involves effecting a lifetime mortgage. It is possible to defer repayments in order to maximise income with interest being rolled up. On subsequent sale of the property, either on moving house or on death, the mortgage and accumulated interest is repaid. This will have the effect of reducing the estate and, therefore, reducing any liability to inheritance tax that may arise.
The advent of Safe Home Income Plans (SHIP) has meant that consumers benefit from increased protection with a code of practice to which supporting companies must adhere. Home income plans are a very complex area that requires impartial specialist advice. Home income plans are not suitable for everyone and it may be that a lifetime mortgages plan is secured on your property.
In addition to home income plans, there are a number of other options available in order to increase income in retirement such as downsizing by moving to a smaller property and investing the resulting surplus capital to provide an income.
In any event, it is crucial that impartial specialist advice is sought in this area.
Lifetime mortgages as from October 2004 are regulated by the Financial Services Authority. A lifetime mortgage is a loan secured on your home. the loan and interest are normally repaid from the proceeds of the sale of your home when you die or move into long term care. With a home reversion plan you sell all or part of your home for cash. However you do not get the full market return for doing so.
The above equity release mortgage detail is for information purposes only as does not constitute financial advice under the Financial Services and Markets Act 2000.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.