We’ll explain the ins and outs of equity release and answer any questions you have, so you can feel confident that any decision you make is the right one for you and your circumstances. We’re here to make sure you have all the facts and understand your options before you decide to go ahead.
We’ll always do what’s best for you, whether that’s taking advantage of some of your property’s value through equity release or not.
What is equity release?
An equity release plan allows homeowners aged 55 and over to access some of the tax-free cash locked in the value of their home.
The value of your home, minus any outstanding mortgage and any other loans secured against it, is the equity you have in your property. This equity is often passed on as an inheritance, however, an increasing number of people are tapping into some of this wealth to help boost their retirement finances.
There are two forms of Equity Release – a Home Reversion Plan and a Lifetime Mortgage plan.
Most people who take out equity release, choose a lifetime mortgage, which is a loan secured against your home. With the flexibility of these plans, you can choose between taking your tax-free cash in one lump sum or have it available to drawdown as and when you need it following an initial, smaller, lump sum release. With a drawdown plan, you only pay interest on the money released. Whereas a Home Reversion Plan, the sale of your home or part of your home to a lender is exchanged for a cash lump sum or a regular income for life. For these reasons, most people choose a lifetime mortgage.
There are typically no monthly repayments for you to make with a lifetime mortgage, as the loan, plus roll-up interest (also known as compound interest), is repaid when the plan ends. That’s usually when the last remaining applicant either passes away or enters long term residential care.
Will I still own my own home?
With a lifetime mortgage, you’ll still own your home and can stay in it for as long as you like, subject to your plan’s terms and conditions.
Will I ever fall into negative equity?
No. All plans that meet the Equity Release Council’s standards come with the no negative equity guarantee, meaning you’ll never owe more than your home’s worth.
Can I move house?
Yes. All plans that meet the Equity Release Council’s standards allow you to transfer your plan to a new home (subject to criteria).
Can I still leave an inheritance?
Yes, you can. Some lifetime mortgages guarantee that a set percentage of your home’s value, at the time your plan ends, will form part of your estate for you to pass on to others in your will.
Can I take out equity release if I still have a mortgage?
Yes, however, you’ll need to repay the mortgage using the money released. Any leftover funds are yours to enjoy.
Futurity Financial Services Ltd are not authorised to advise on Home Reversion Plans.