Equity release allows you to access the equity that is tied up in your home, making cash available for a specific purpose. It can be released as a lump sum or in a number of smaller amounts.
Assuming you own your home and are over 55, you may wish to release equity for reasons including repaying debts, making a gift to children or grandchildren or increasing your income levels in retirement.
Equity release works in two ways. You can either take out a lifetime mortgage in which you retain ownership of your property or you can arrange for a home reversion provider to buy all or part of your home. In either case, you’ll continue to live in your home and will not pay rent. You can also set aside a proportion of your property that will not be affected by equity release so there remains a dedicated amount for your children to inherit.
Lifetime mortgages are most popular. As with normal mortgages, it’s worth considering all available lenders so you secure the best deal. No matter which you choose, you’ll have a fixed interest rate or at least an upper limit on how much interest you’ll end of paying. You either have the option to pay interest monthly or alternatively add it to the mortgage which increases the amount borrowed. You don’t usually have to repay your mortgage within your lifetime.
The other option is home reversion. In this case, you will no longer own your entire property as a home reversion provider will take ownership of part of it. Usually, those that choose this option receive up to 60% of the market value of their home. If you decide to move, this is normally still possible as long as the provider is confident in the security of your loan.
Seeking financial advice
Before you make a decision on whether a lifetime mortgage or home reversion is the best way for you to release some of your equity, we recommend contacting a trustworthy financial advisor to thoroughly assess the options with you.
At Ardent, we are members of the Equity Release Council. This means we follow the high standards of conduct and practice in the provision of advice on equity release, which have consumer safeguards at the heart of everything they do. Our advisers hold the necessary qualifications in equity release to meet the requirements of our regulator, the Financial Conduct Authority.
We’re able to give you face to face advice either in the comfort of your own home or at our office in Clifton, York.
Important considerations before you look into equity release any further:
- You must be aged 55 or over and own your own home
- You must wish to release equity for a specific purpose
- The value of your estate will reduce and the amount you can pass on in inheritance via your estate will therefore also decrease
- Your entitlement to certain state benefits may be affected
If you’ve sought independent advice, made sure you fulfil the criteria and decided on the best provider or lender. we can liaise between them and the solicitor to ensure your equity release goes ahead smoothly.
We can also factor your equity release and other circumstances into a complete financial plan to help you achieve whatever goal you’re working towards.
Find out more about our equity release service here.