https://www.which.co.uk/.../equity-release/what-is-equity-release-a5jqy4d36xlv Over recent decades the housing market has generally grown and the value of houses have increased significantly over the last 30 years. However do your research, as some equity release products now allow you to pay off the interest monthly. They can provide either a large lump sum of cash or regular mounts when its needed in later life. It can be used to pay off expensive debt, such as for a car, secured loans or even the mortgage. However, in as much as it can be an excellent option, it has some limitations & pitfalls. The minimum age to be accepted in to an equity release scheme is 55, although this can vary according to the provider. Please get in touch, equity release|downsizing|family finance|inheritance|buying & selling|letting|property abroad|mortgages|property maintenance. Only by doing this can you start to compare like with like. Reputable providers should offer a “no negative equity guarantee”, which means what customers owe can never exceed the value of their property. This means you and your family will not benefit from future house-price rises on the portion you have sold. From initial research to the successful release of funds at completion, you can rely on our team to explain everything in a language that’s easy to understand. They provide a negative equity guarantee – no matter what happens you can never owe more than the value of your home. Be aware of how these charges are paid. The main disadvantage of equity release is that it does not pay you the full market value for your home. With a lifetime mortgage, the most common type of equity release plan, there are typically no monthly repayments to make. In August 2018, 139 Equity Release schemes were available, which is a … Equity release schemes are designed to be a lifelong commitment, so, if you change your mind, need to move house or want your equity for something else later, you could find yourself seriously restricted. Whilst equity release is accessible from some providers from the age of 55, the likelihood is you will live a lot longer, your interest will accrue, and you may end up costing the lenders more than they would make (especially if there is a no negative equity clause). But signing up for an equity release deal is a significant commitment, and it is important to do your homework in advance to ensure you know how the scheme works and whether it is right for you. Negative equity schemes are expensive. Like to advertise with us? If you use a home reversion equity release plan, you effectively sell some or all of your home to the provider. With equity release, there’s no need to move. / 24 August 2016 He now works as a freelance writer for a wide range of business and finance publications. The money you release can be taken as a lump sum or, paid out in several smaller sums (or as a combination of the two). The most obvious one would be downsizing. Equity release has come a long way since the 1980s and ’90s when cowboy lenders flogged plans that cost far more than the value of the property and wiped out people’s entire estates. Always obtain independent, professional advice for your own particular situation. What are the risks and pitfalls of equity release? You don’t need to have fully paid off your mortgage to do this. As these schemes are set up to run for the rest of your life, if you circumstances change and you want to repay early then there can be substantial charges. So at Bower we take the time to ensure that any decision you make is right for you and your individual circumstances. The Top 3 … Basically, equity release is letting you gain access to cash that is tied up within your home. Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income, using the value of the house.. This means your relatives could get a smaller inheritance than they had expected. It’s a highly regulated (by the FCA) sector with upmost consumer protection. Equity release, at the end of the day, is a mortgage you raise by keeping as security your share in your home. It’s worth pointing out that individual circumstances vary and we would recommend seeking the advice of an independent financial advisor to discuss your specific situation. Laura Miller 10 October 2018 • 7:00am This means that if something unexpected happens and your property is sold for less than the amount that you owe, your estate won’t have to make up the shortfall. Equity release applies to a variety of items that allow you, (if you’re over the age of 55), to access the equity (cash) locked up in your home. Your monthly outgoings won’t increase. The equity release option taken 12 years ago for lifestyle reasons now has significant effects on fourth age care. Equity release means you can stay put and don’t have to face the stress and expense of moving. The longer you borrow money through an equity release plan, the longer interest charges have to build up. Why not use our free equity release calculator to find out how much you could potentially unlock from your property? There are only two main types of schemes: lifetime mortgages and home reversions. If there is equity in a house, an equity release product allows an owner to take some of that cash out the house without having to move. ( 18 June 2019 ). Copyright © 2020 The National Association of Property Buyers Registered in England No. Equity release is often the only method available for older people to extract funds from their property without downsizing or selling. It would be beneficial to discuss the option with a financial adviser to receive their expert opinion before going ahead with anything. If you’re in good health and have no trouble making the move, downsizing can save you a great deal of money. The money could also be used for home improvements or funding for care which often is a key influencing factor in later life. Some people decide to use some of the money they release to make home improvements. Equity release comes in two forms, lifetime mortgages and home reversion plans. You will receive far less money than you would from selling the property on the open market – although of course in that situation you would still have to find somewhere else to live. MoneyWise.co.uk is now a part of Wise Publishing, Inc.. Have you ever made it to the end of the month without a clue where your money went? Over 55 and UK home worth £70k or more? Is Equity Release popular? Large cash deposits can be used for gifting to children which can help them put a deposit on a new home and start on the. Chris Torney I would also visit a number of different providers. Here Simon Read asks experts to answer readers key questions. Is equity release the right option for you. 8836447. Alternatively, visit our equity release page to find out more. The "catch" is that the income-provider must be repaid at a later stage, usually when the homeowner dies. Equity Release may not be the perfect option every time. When and how will the total amount of charges have to be paid? But how does it work, and which are the best schemes? At Equity Release Supermarket, we provide a transparent and customised service which sees our experienced and friendly advisers guide you through the whole application process. According to the Equity Release Council, there is a huge demand for Equity Release loans with double the amount of lenders now offering the product since 2016. Equity release schemes are much more sensible than they uised to be - they have things like a no negative equity guarantee (if the equity release provider is a SHIP member). Get all the no-obligation information and advice you need about equity release. This leaves many homeowners in their later years with large amounts of money / value (equity) in their home, but yet they have retired and may have little in the way of cash reserves or savings. However, some of the key advantages and disadvantages are listed below: If we take a look at the example below based on borrowing £40,000 on a property worth £200,000: There is no doubt that equity release schemes can be useful, but like most things they come at a cost so think carefully and seek the appropriate advice before you enter into a scheme. It can affect your social security benefits – as benefits such as pension credit and council tax benefits are means tested, if you use the money to increase savings this can impact your ability to receive these benefits. Just as with a standard loan, interest is accrued with equity release, but is payable when you sell your home to move into residential care, or when you pass away. Equity release means you can stay put and don’t have to face the stress and expense of moving. Equity release allows you to access some of this equity as tax-free cash and the amount you can borrow depends on the value of your home, how old you are and where you live. This is the cause of many equity release problems over time. If you sign up for equity release, it is inevitable that at least some of the value of your home will have to go to repay the provider when you die or move into care. Equity release means you can stay put without the stress and expense of moving. You can do this via a number of policies which let you access – or 'release' – the equity (cash) tied up in your home, if you're 55+. Provided by HUB Financial Solutions Limited. Equity release is, in a nutshell, a way to unlock the value of your property and turn it into a cash lump sum. Remember to take good independent financial advice before making important decisions. So, as is the case with all other mortgages, it’s advisable that you are aware of your other options. Set up costs can be high, which will include a valuation fee, solicitor fees, application fee and any advice costs – so ensure you know those costs in advance. What are the advantages and disadvantages of this route? Still not sure whether equity release is right for you? The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. 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