Do you want to improve cash flow and live a happy retired life?
If your answer is yes, then equity release schemes could be the perfect solution. With the help of these equity release schemes which encompass both lifetime mortgage schemes and home reversion, you can easily unlock cash or equity against the value of your property. The options the lenders provide are allowing applicants to receive a tax free lump sum or help towards supplementing their pension income. All equity release schemes are now regulated by the Financial Service Authority (FSA). All the schemes which our qualified advisers offer are members of SHIP (Safe Home Income Plans), now known as the Equity Release Council.
Conditions required for equity release schemes
If you are planning to apply for an equity release UK scheme then you have to be over 55. There must be no or very little mortgage on your property. Any existing mortgage must be repaid on completion of the new equity release loan.
The value and condition of your property also plays an important role in equity release plans. To qualify for most equity release schemes, the value of your property must be at least £70,000 & be of standard construction, although non-standard construction properties can be acceptable lending still.
*Ring 0800 321 3156 if you have property eligibility questions.
To fulfill requirements, two different types of equity release schemes are on offer.
- Lifetime mortgages – Under these schemes, you can release money against the value of your property. The repayment is made by selling the property after you die or move to a care home.
- Home reversion plans – Unlike lifetime mortgages, these plans allow you to sell all or only a part of your property to lenders. You can also leave the property for your beneficiaries.
Check the alternatives before proceeding
Equity release companies do not impose any sanctions on how the proceeds of completion are spent. Nevertheless, your lifetime adviser will qualify with you during the factfinding process that the funds are being best utilised. Your adviser will use an equity release calculator to assess the maximum amount you can release, and then establish whether this can meet your requirements and the best possible route to achieve this.
Before proceeding with any application it is the role of the adviser to check whether there any alternative ways of releasing equity. These could include: –
- Downsizing – by moving to a lower value property could effectively provide a cash lump sum
- State Benefits – if eligible, have all mean tested benefits such as pension credit, savings credit or council tax benefit been claimed?
- Home Improvements grants – check whether any grants are available for loft or cavity wall insulation which could save you money
- Use existing savings/investments – before taking equity, why not consider using your savings first as may prove cheaper in the long run
- Consider other types of loans – should the nature of the lending be shorter term then maybe a loan or a 0% credit card could solve the problem
What can equity release funds be used for?
With retirement lifestyles becoming more adventurous and horizons are broadened, the range of uses for equity release schemes has become vast. However, there are still the usual suspects as to why people still wish to take a release of equity from their home: –
- Home improvements – maybe a new kitchen, bathroom, decorating or conservatory. The list is endless!
- Holidays – to enjoy your retirement for many involves travelling. Equity release can provide the funds for that dream vacation
- New Car/Caravan – if your old car is in need of change, whether for economy or disability then you could go & purchase a new vehicle
- Debt Consolidation – if you monthly mortgage, credit card or loan payments are becoming an issue, then repaying them via equity release can reduce your outgoings considerably
- Helping Children – a common reason for equity release in the current climate is to pass the children their inheritance early to help them onto the property ladder with a house deposit, or a lump sum to get their business off the ground
- Purchase an annuity – can help in improving your income during retirement
- Inheritance tax mitigation – by careful inheritance tax planning, you can use a release of equity to lower your potential IHT bill
As can be seen, there are many uses that these home equity schemes can fulfil and financially assist retirees in their hour of need.
To discuss any of the areas in greater detail, call the Equity Release 2go call centre on 0800 321 3156 where independent equity release advise is available to you.
…or complete a contact form and one of our advisers will call you back.