What is equity release?
If you own your own home, equity release is a way of turning some of the equity in your house into cash.
Will I still be able to live in my house?
Can anyone get equity release on their property?
Generally, the schemes are available to people aged 55 and over.
I’ve heard there are different types of schemes. Can you explain it?
There are 2 main types of equity release: –
- Home reversion: this allows you to sell either part or all of your home to a reversion provider in return for a lump sum or regular payments; or
- A lifetime mortgage: the mortgage is secured against your home, and the lender will have a legal charge against your property until the loan is repaid. The mortgage is designed to run for the rest of your life. The loan and any accrued interest will be paid back when you die or go into long term care.
What are the benefits of securing money through an equity release scheme?
For many people having access to a cash sum and staying in their own home is an attractive offer. And even better, with some plans, there are no regular payments to make.
Will the cash sum be taxed?
Can I use the cash for anything?
Yes, once you have received your cash lump sum, it’s your choice to spend it as you please.
If I’m paying interest on the loan, can I end up paying more back than the value of my house?
No! The ‘no-negative equity guarantee’ means that you’ll never repay more than the value of your home. Your estate will never owe more than the property is worth when it’s sold.
How do I go about getting an equity release scheme?
- first, you need a conversation with an equity release broker/equity release specialist financial advisor;
- you’ll go through the details of the equity release with your equity release financial advisor at a virtual ‘face to face’ or telephone meeting;
- a home valuation needs to be done, then an application processed with the lender;
- an offer is made along with the legal documents to your solicitor;
- you’ll have a face to face meeting with your solicitor, which can be done while observing social distancing, to sign the equity release documentation; and
- finally, the funds are released through your solicitor.
Is equity release right for me?
All financial decisions must be given your full attention before making a decision. We recommend you discuss the equity release scheme with your family. It could be you want to provide them with some or all of the cash lump sum. However, you must also consider that releasing equity now will reduce the equity in your property on your death.
Also, if you receive any means-tested benefits, this could have an effect on your entitlement to receive the benefits.
For more information on equity release, call Helen Hendry at Smith & Co Solicitors on 01473 228019.