How Does Equity Release Work?
Looking to raise tax free cash without moving home?
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Mortgages In Retirement
Mortgages In Retirement Service
- Borrowing options from age 55 to 99
- Independent advice on your mortgage options
- Interest only options
- No obligation service
- One short form to complete
How your figure is calculated?
The primary factors used to determine the amount of cash you can raise with equity release are:
- Property value – A higher value property will result in a higher equity release calculation
- Age of youngest applicant – If you are applying as a couple the amount of equity you can release will be calculated based on the youngest applicant
- FREE initial consultation for UK Homeowners aged 55 plus
- Full assessment of your circumstances on whether Equity Release is right for you.
- Specialist advice for homeowners on equity release scheme options.
- High level of personal service.
Things to consider
Key Advice, specialist advisers search the whole market to find the right equity release plan for you. They’ll explain all the options available and that taking a plan reduces the value of your estate and may affect any means-tested benefits you’re eligible for.
You have to get specialist advice before releasing equity; it’s the only way to do it. The initial consultation is free with no obligation to proceed. If you decide to go ahead with an equity release plan our advice fee, usually 1.99% of the amount released, subject to a minimum of £1,499, is payable only on completion.
With a lifetime mortgage, the most popular form of equity release, you’ll still own your home. As with any kind of mortgage, it’s a loan secured against your home. All equity release plans we recommend have a no negative equity guarantee, which means you’ll never owe more than the value of your home.
How Does Equity Release Work?
Many older home owners feel they are ‘cash poor, asset rich’ meaning that although they have little in the way of readily available funds their home may be worth a huge amount and vastly increased in value since they purchased it. Equity release is a method that allows homeowners, typically over the age of 55, to unlock some of the capital tied up in their home without having to downsize or relocate.
There are two different kinds of equity release; Lifetime Mortgages and Home Reversion Schemes.
How does a Lifetime Mortgage work?
Lifetime mortgages work by taking out a loan for a percentage of the market value of your home. You continue to own your home but make an agreement with a lender that the sum you borrowed plus and accumulated interest will be repaid through the sale of your home when you and your partner either die or permanently move to a residential care home.
Types of lifetime mortgage:
- Roll-up Mortgage –With a roll up mortgage you do not need to make any monthly or annual interest repayments instead this amount is repaid along with the original amount you borrowed through the sale of your house. It is important to consider however that as this type of plan involves compound interest the amount you eventually repay may be considerably more than you initially borrowed. All Equity Release Council registered plans however carry a ‘No Negative Equity’ guarantee which ensures you or your estate will never be required to pay more than the amount your home is sold for even if it’s less than you originally borrowed.
- Fixed-repayment Lifetime Mortgage – This plan does not incur any interest rates. During your application you agree how much more than the amount you are borrowing will be repaid to the lender through the eventual sale of your property.
- Interest-only Mortgage – With this option you can pay monthly or annual interest repayments but the original sum you borrowed is still repaid through the revenue produced through the sale of your home.
How does Home Reversion work?
Home reversion works by selling your home to a reversion company or individual. They will pay you less than its current market value but in return will guarantee your right to continue living there until you and your partner both die or permanently move into care. Some plans will charge you a monthly rent but at a reduced rate to what you would normally expect to pay for your house, others will let you stay there for free.Some home reversion schemes give you the option of being paid in a one off lump sum or to receive regular ‘income’ payments.
Most equity release plans will require an initial arrangement fee as well as a fee for the valuation of your property; these costs vary from lender to lender so it is important to shop around to find the best deal for you. You will also have to pay legal costs to your solicitor and if you want to repay your lifetime mortgage before the end of the contract you will most likely have to pay an early repayment charge.
Is equity release right for you?
Equity release is a long-term commitment, so it is a good idea to consider all of your options before committing to a plan.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Equity release may affect your entitlement to state benefits and will reduce the value of your estate. It may involve a lifetime mortgage or home reversion plan. All content set out in this website is provided for information only and should not be considered as advice. It is strongly recommended that you seek advice of a qualified, independent financial advisor before making any decisions to take out an equity release product.
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