3.3 million UK homeowners aged 55s and over currently have outstanding mortgages.
For these homeowners who are looking to reduce their committed monthly expenditure by repaying their existing mortgage, equity release could be the solution.
What is equity release?
Equity release is a way for homeowners aged 55 and over to unlock the cash, known as equity, from their property.
If you’ve owned your home for a number of years, the value of your home has likely increased.
This, coupled with the mortgage repayments you have already made, means you might have a sizeable amount of equity built up in your home.
The amount you can unlock depends on the value of your property and the age and health of the youngest homeowner.
You can borrow from a minimum of £10,000 up to a current maximum of 55% of your property’s value.
It’s a condition of equity release that you must first repay any existing mortgage, however, once this is repaid the money you release is yours to enjoy spending, whether that’s on home improvements, a new car or providing a financial gift to loved ones.
What types of plans are available?
By far the most popular type of plan is a Lifetime Mortgage, which allows you to you continue owning 100% of the home you love.
You can choose how you want to access the cash you unlock, either as a lump sum or over regular smaller instalments.
Plus some equity release plans don’t require any regular repayments so you have the freedom to choose when to make payments.
There are also other types of equity release plans that might be more suitable for your needs, and it’s important that you take advice when considering equity release.
A specialist broker can discuss all the options available to you, including what impact it could have on the size of your estate over time, as equity release will decrease this, and if your entitlement to current and future means‑tested benefits may be affected now or in the future.
How does equity release work?
When you pass away or move into long-term care, your house is sold and the loan, plus accrued interest, is paid off with the remaining money passing to your estate.
As the interest accumulates it can equate to a substantial portion of the property’s value when it is sold as interest rolls up along with the capital, meaning equity is reduced.
However, some plans now allow the interest or part of the loan to be repaid earlier to lower costs.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and may reduce the value of your estate and impact funding long-term care.
To understand the features and risks ask for a personalised illustration.
Safeguard your loved ones
If you’re considering equity release, it’s important to discuss this with your family as it will impact the amount of inheritance you can leave.
With some equity release plans, you can ring-fence a portion of your property’s future value, to guarantee inheritance to your family.
All plans also have a no negative equity guarantee, meaning your estate will never owe more than your property is worth when it is sold.
We provide initial advice for free and without obligation.
Only if your case is completed would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply.
This advertisement has been brought to you by Age Partnership.
Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.
