Equity Release – Is it right for me?
12 February 2019 by Claire Martin
Are you aged 55 or over and looking to release some equity from your home?
Whether you are looking to supplement your existing income, take a trip around the world or undertake some home improvements, you may be considering an Equity Release Mortgage (otherwise known as a Lifetime Mortgage).
An Equity Release Mortgage allows you to release a lump sum which is secured against your home similar to a standard residential mortgage. The big difference is that regular repayments are generally not required and the interest is charged by the Equity Release Mortgage Lender on a daily basis and ‘rolls up’ until the mortgage is repaid, which is usually on death or if you are required to go into a long term care facility. If you’re a joint borrower, this would happen on the death of the last survivor or in the event of them going into long term care. This means that the outstanding mortgage amount can increase quite rapidly.
Taking an Equity Release Mortgage can be a big step for many people so it’s important to consider the following key points before making any decision:
- Take advice from an appropriately qualified Independent Financial Adviser who is on the Financial Conduct Authority (FCA) Register and who specialises in retirement planning. The Equity Release Council hold a directory of suitably qualified advisers.
- If you believe you might want to move home in the future, the Equity Release Mortgage could impact on this. They don’t generally prevent you from moving home and it is sometimes possible to “port” the mortgage to a new property, but this would depend upon the type and value of the property being purchased. If you are downsizing and wish to pay off all or part of the outstanding mortgage, this can result in a very high ‘Early Repayment Charge’.
- Taking an Equity Release Mortgage could have an impact on your entitlement to any state benefits.
- You may wish to consider discussing the matter with the beneficiaries of your Will as an Equity Release Mortgage will reduce the amount of their inheritance. This will help to prevent any unexpected ‘surprises’ when the time comes to administer your estate.
- Ensure that your Equity Release Mortgage has a “no negative equity guarantee”. This means that when the property is sold, should the value of the property have fallen below the amount outstanding under the Equity Release Mortgage, then your estate will not be pursued for any shortfall.
It’s important to consider all of the above before deciding whether an Equity Release Mortgage is right for you. If you decide that it is, our friendly and approachable team, who are members of the Equity Release Council, have the experience to guide you through the legal process to ensure that you are able to book that holiday or buy that new car as quickly and as stress-free as possible. We offer a fixed fee service which is payable on completion of the Mortgage. Call 01206 700113 or email [email protected]
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