Equity release schemes
Equity release schemes enable you as a homeowner to unlock assets within a property, without having to downsize or leave the home you are living in, receiving the money as a tax-free lump sum (or draw down payments over a period of time). This option provides those aged over 55 far more autonomy over how they can live their life when they reach retirement age, with releasing equity allowing homeowners to use the money for multiple purposes, such as home improvements or helping family members get on the property ladder. Depending on the equity release provider, you can expect to release equity between 20% up to 60% of the property’s value.?
Perfect Funeral Plans works closely with some of the leading equity release providers in the country, helping you to access the money you need in your retirement years. Simply provide us with your details and we will get back to you with a quote promptly.
Equity Release Lenders – What Are The Terms?
There are certain stipulati0ns when it comes to meeting the criteria for equity release. Lenders will need you to be over a certain age (in the majority of cases, this will be over 55 for lifetime mortgages, and 60 for home reversion scheme providers) so that you will be able to access the equity in your home. You will also need to be a homeowner to be eligible, or have a small mortgage amount outstanding.
With both types of equity release, it is possible to receive equity as either a tax-free lump sum or through withdrawing regular payments.
Equity release schemes end after you have either gone into long-term care or have passed away. Depending on the scheme that you have chosen, one of two things will happen:
- If you have chosen the home reversion scheme option, then the plan will end with the property being sold off, with proceeds then being distributed between those who still have shares in the property
- If you have opted for a lifetime mortgage, then the loan (as well as the accrued rolled up interest) is repaid through your estate. You also have the ‘no-negative equity guarantee‘ clause which is part of a lifetime mortgage, meaning that if at the time of selling the property there is still outstanding debt, neither you or the estate will have to pay this amount
- When it comes to lifetime mortgages, it is worth noting that repayments will not be made until all people within the property have either gone into long-term care or have died
What is The Difference Between Lifetime Mortgages and Home Reversion Plans?
The main differences are that lifetime mortgages allow you to still retain ownership of your home (with a proportion owned by the lender). You take out another mortgage which allows you to accrue interest (which means that this unpaid interest is added to the loan taken out).
With a home reversion scheme, you either sell all, or some of your property to a home reversion provider, with fees recovered after the house has been sold.
With both equity release schemes, it may be possible to ring-fence a percentage of the property’s value so that you can pass this on as an inheritance to family members. If this is something of interest you, you should make sure that you state this when making an application for equity release.
Equity Release – When Would You Use It?
There are a number of different reasons as to why someone may decide to use equity release. These are among the most commonly cited:
- For home improvements: a number of senior citizens decide to use equity release to fund renovations in their home, which can be particularly useful if you are experiencing reduced mobility in your retirement years and need a bathroom or bedroom that is more readily accessible, for example
- It can also be used to help pay any remaining mortgage repayments, or other outstanding debts that you have
- Equity release is often used to help children get onto the property ladder, as these schemes enable you to release a tax-free lump sum all at once
- A number of senior citizens decide to use equity release in order to do all the things they wanted to but couldn’t whilst working. This may be buying that brand new car, or deciding to go on a number of holiday cruises.
- To top up your monthly income in your retirement years is another popular reason why people choose equity release. In this scenario, you may decide to opt for receiving regular equity release payments (or as and when you need it) as opposed to taking out one lump sum
- For those who were previously self-employed, equity release may be used as they may not have had a private, or workplace pension, and therefore would like to top up the state pension benefits that they receive
- Equity release is also popular with those who do not want to downsize or move from their property in order to release money from their home. This option allows you to live in your home rent free, whilst still being able to unlock housing wealth that can be used for multiple purposes
Apply for Equity Release
If after reading this guide, it has confirmed that for you, equity release may well be the perfect option, then we can help you get on the right track. Perfect Funeral Plans work in co-operation with leading equity release experts in the UK, and can ensure that we find the right equity release product for you based upon your individual circumstances, quickly and efficiently. To find out more about the services that we offer, contact us today.