Published On: Sun, Nov 13th, 2022

Equity release has grown in popularity: but what is it and could it be right for you? | Personal Finance | Finance

The research highlighted that 23 percent of respondents believed that they would lose their home with equity release. Furthermore, 67 percent of respondents also said that they have little or no understanding of the impact that interest rates can have on equity release plans.

With equity release, you can unlock a percentage of the tax-free cash that’s tied up in your home, which you can enjoy spending once any existing mortgage has been repaid.

  • A lifetime mortgage is the most popular form of equity release. With this type of plan, you continue to own 100 percent of your own home.

  • The money that you release from your home is tax-free.

  • You don’t have to make any repayments on the money that you release, as the loan, plus the interest that you accrue is repaid when you die or move into long-term care.

  • The rate that you secure now can be fixed for life, but you may have the option to switch plans or rates in the future, just like with a standard mortgage.

  • You have the option to make ad-hoc repayments on your loan, as and when your financial situation allows.

Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property.

The research, which surveyed 1001 homeowners aged 55 and over questions about equity release and general finances, highlights that many people are not aware how equity release can be used and the safeguards that are in place to protect customers.

The right to remain in your home is one of the main standards established by the equity release industry body the Equity Release Council (ERC). Their standards were established in order to protect people who are releasing money from their homes.

To ensure that you get the best plan for your individual requirements you should contact an adviser such as Age Partnership, as the plans that they recommend will be protected by the safeguards.

Another standard established by the ERC is the “no negative equity guarantee”. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.

It is a requirement that anyone taking out an equity release must get professional advice from a trained equity release adviser.

As part of the free equity release quotation, your adviser will provide you with a personalised illustration which outlines the features and risks involved.

It’s the adviser’s job to ensure that you’re fully aware of all aspects of equity release, including the effect it will have on the amount of inheritance you can leave and if your entitlement to means-tested benefits could be affected, either now or in the future.

Equity release requires paying off any existing mortgage.

Correct at the time of publication.

* Based on the volume of plans from a panel of lenders Q1 2021 – Q3 2021.

The Express Money Equity Release service is provided by Age Partnership Limited, 2200 Century Way, Thorpe Park, Leeds LS15 8ZB. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Age Partnership Limited is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432 and is trading as Age Partnership.

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