What is Equity Release?

Unlock the money within your home to enjoy your retirement.

Equity Release allows individuals over the age of 55 to release money from the property they live in for a number of reasons. This can play a crucial role in retirement funding and the flexibility and safeguards which are built into plans that comply with Equity Release Council product standard to enable thousands of homeowners every year to safely tap into their housing wealth.

There are two types of equity release; Lifetime Mortgages and Home Reversion plans, the former being by far the most popular.

Equity is the value of your home, minus any mortgage or loan secured against it.

What is a lifetime mortgage?

A lifetime mortgage allows you to access equity and turn it into funds for your retirement. They are becoming a mainstream way to raise capital. A lifetime mortgage is a type of equity release product that allows homeowners aged 55 and over to borrow money against the value of their property whilst still owning the property. Interest is charged on the amount you borrow which can either be added to the total loan amount or you can make repayments. The loan is repaid when your home is sold, usually following your passing or move into long-term care.

As we live longer, making the most of your retirement is an increasingly popular reason for choosing a lifetime mortgage. Retirement is something to be celebrated and you deserve to enjoy later in life. Releasing equity from your property can be an option to provide the financial means to enjoy your later years.

Equity is the value of your home, minus any mortgage or loan secured against it.

Why consider a lifetime mortgage?

  • Home improvements or adaptions
  • Paying off existing loans and debts
  • Helping family get on the housing ladder
  • Additional retirement income
  • Later life care at home

Types of lifetime mortgages:

An interest roll-up mortgage

You can receive either a lump sum or regular payments. The interest is added to your loan and the total loan plus interest earned is repaid when your property is sold.

An interest-paying mortgage

You can borrow a lump sum and repayments are made monthly or on an ad-hoc basis.  The loan is repaid when the property is sold at the end of the mortgage term.

Lump sum

A lump sum can be taken at the start of the mortgage term or alternatively a lower lump sum can be taken with a further drawdown facility.

Drawdown or income

This allows small amounts to be taken on a regular or periodic basis and the interest is only paid on the money actually borrowed.

Key Factors to consider

A lifetime mortgage plan will reduce the size of your estate

By releasing funds in your lifetime that would otherwise stay tied up in your home until you die, a lifetime mortgage plan may reduce the size of your estate and the amount that you would be able to leave to any beneficiaries as an inheritance.

Your entitlement to means-tested benefits could be affected

It is important to discuss with your adviser whether releasing money will have an impact on your means-tested state benefits.

Are lifetime mortgage plans regulated by the Financial Conduct Authority (FCA)?

The FCA regulates lifetime mortgage providers and sets out the rules they must follow to ensure that plans are presented in a clear way.

This is a lifetime mortgage.  To understand the features and risks, ask for a personalised illustration.  You should always speak to an independent qualified equity release adviser before taking out any lifetime mortgage.

 At Smiths Financial, we have an experienced and professionally qualified equity release adviser ready to chat with you so you can discover if releasing funds from your property may be the right the thing for you to do.

Paul Jenkins has spent the last 8 years advising older clients as to what their options are.

We specialise in working in the Tendring area, so we understand the market here and recommend face to face appointments where possible.

For Equity Release & Lifetime Mortgages we charge a fee of £1295, which is payable upon completion of your mortgage.

Ready to talk through your needs?