EQUITY RELEASE CAN BE HELPFUL IN MANY WAYS. FROM PAYING OFF THE REMAINDER OF YOUR MORTGAGE, TO BUYING A HOLIDAY HOME, TO SETTING UP YOUR CHILDREN OR GRANDCHILDREN FOR THE FUTURE.
Equity release allows individuals 55 and over to release money from the property they live in without having to make any monthly repayments. off the remainder of your mortgage equity release could be a solution for you. With the current cost of living crisis, paying monthly mortgage payments might be a struggle alongside bills and other expenses. Equity Release can be used for a number of things, paying off your mortgage to ease monthly expenses being one of them.
TWO TYPES OF EQUITY RELEASE
There are two types of equity release; Lifetime Mortgages and Home Reversion plans. Which are both regulated by the FCA. By using an Equity Release product, a home owner can draw a lump sum or regular smaller sums from the value of their home, while remaining in their home. You can also take an initial lump sum and draw other lump sums up to a set amount (agreed at the start). The key difference is that with a Lifetime mortgage you retain ownership of your home. In a Home Reversion plan, the sale of your home or part of it to a lender is exchanged for a cash lump sum or a regular income for life. For these reasons, most people choose a Lifetime mortgage.
THINKING ABOUT TAKING OUT AN EQUITY RELEASE PLAN?
If you are thinking of taking out an Equity release plan then you need to find out as much as you can about your options. You can then weigh up the advantages and disadvantages fully before you decide if it is right for you. We as Equity Release advisers, along with our Wealth Planner colleagues can help you to understand the steps involved. We can talk you through your options, the effects this might have on state benefits, tax and your obligations.
Another great example for using Equity Release is to raise money to give to your children or grandchildren. This could enable them to afford to go to university, pay for a wedding or even help them get a start on the property ladder by gifting them a deposit for their first home.
You may have considered leaving them some money in your estate. The great thing is you can do it now, when they may actually need it.
With some providers you can make a monthly repayment or an interest only payment. This means the amount released does not grow higher each month. Or you can make no payments at all. This is when your loan and the interest payment due on it, rolls up monthly (compounds) onto your balance. Lifetime mortgages will reduce the equity left in your home and the value of any inheritance.
If you are a couple, the repayment is not made until the last remaining person living in the home either dies or moves into care. This means you both are free to live in your home for the rest of your lives.
If you would like to learn more or speak to one of our specialists, please get in touch.
At Kingswood we offer lifetime mortgages. To understand the features and risks, ask for a personalised illustration.
By Michelle Jefferson, Mortgage and Equity Release Adviser at Kingswood.