Boost Your Finances Without Moving: The Equity Release Option

This informative blog post summarizes the key points from a conversation with Graham, a later life planning expert, about equity release mortgages.

“As experienced later life lending specialists, we take pride in helping our customers get the most out of their retirement. We provide independent advice on the whole of market, so we can provide the most suitable option for your needs. We are happy to provide an initial free no obligation consultation in your home.”

Graham, My Later Life Planning

Read on or click HERE to watch the full interview

What is equity release?

Equity release allows homeowners aged 55 or over to access tax-free cash from their property’s value while continuing to live in it. They don’t have to make monthly repayments, but the interest rolls up and is added to the loan amount. The loan is repaid when the property is sold.

What are the benefits of equity release?

It enables homeowners to access funds for various purposes like home improvements, gifting to family, or to pay for care services; such as live in care. People can remain in their own home instead of a forced decision to sell. There are flexible options for receiving the money as a lump sum or a drawdown.

Equity release is highly regulated with safeguards for consumers, a far cry from the problems of a couple of decades ago.

Types of Equity Release Products:

• Lifetime Mortgage: The most prevalent option, it’s a loan secured against your property with interest added. You don’t pay monthly repayments, but the loan is repaid when the property is sold.
  • Drawdown Lifetime Mortgage: Provides flexibility to access funds in stages as needed.
• Home Reversion: Less recommended by Graham, it involves selling part or all of your property for a lump sum or income, though you generally receive less than market value.

Applying for equity release:

• Eligibility: You must be 55+ and own a property valued at £70,000 or more.
• Broker Consultation: Discuss your goals, financial situation, and receive personalized recommendations.
• Fact Find: The broker assesses your income, expenses, and future plans to ensure suitability.
• Product Selection: Choose the plan that best aligns with your needs and risk tolerance.
• Application & Approval: The broker submits your application to lenders.
• Valuation & Legal Advice: An independent valuation is conducted, and legal counsel is mandatory.
• Completion: Upon final approval, funds are released to you.
• On average the process takes around 6 weeks.

The Evolution of Equity Release:

While equity release has existed for decades, Graham highlights the significant improvements in the industry over the past 20 years. Previously, rigid products with high interest rates and limited flexibility created concerns. Today, regulations and safeguards ensure transparency and client protection. Some key changes include:

• Mandatory interest payments: Borrowers can now pay at least 10% of the interest accrued, preventing the loan from ballooning uncontrollably.
• Product diversification: Fixed-rate and variable-rate options, lump sum or drawdown facilities, and home reversion plans cater to diverse needs.
• Stricter regulation: The Financial Conduct Authority (FCA) oversees the industry, ensuring responsible lending practices and fair treatment of clients.

Additional Considerations:

• Impact on Inheritance: Equity release reduces the value of your estate, potentially affecting inheritances. However, some strategies can mitigate this impact.
• Welfare Benefits: Discuss potential implications with a financial advisor to ensure continued eligibility.
• Seek independent legal advice before proceeding. Explore alternatives like downsizing, reverse mortgages, or borrowing from family before making a decision.

Equity release is a complex financial decision. Seek professional advice from qualified brokers and solicitors to understand all implications and ensure it aligns with your long-term plans.

To explore Equity Release further contact Graham:

• Website https://www.my-laterlife.com/
• Phone numbers: [mobile number] and 0207 100 4255