Independent equity release advice is essential to ensure that an equity release scheme is suitable for you and that you select the correct scheme. So what is an equity release scheme: |
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Equity Release is a generic term given to a variety of schemes that help homeowners over at least 55 (or in joint cases, both people are over 55), release some of the capital tied up in their home without the need to move. Such schemes include:
- Lifetime Roll Up Mortgages, where no monthly repayments are required.
- Home Reversion Plans
- Interest Only Mortgages, which do require monthly repayments of interest to avoid the loan from increasing.
Depending on your age and property value, within plan criteria you can choose how much equity to release. The money can be used for whatever purpose you want, whether that is to replace your car, do home improvements or provide extra income, the choice is yours.
Some kinds of lifetime mortgage allow the interest to be rolled up so that,
unlike a traditional mortgage, no repayments need be made until death or needing to move into Long Term Care when the house is sold, the loan repaid and any balance paid to your estate.
Another advantage of releasing equity in your home is that it could reduce the value of your estate below the 2007/8 Inheritance Tax threshold of £300,000. This could result in substantial savings to your beneficiaries who would otherwise be liable to pay 40% Inheritance Tax on everything over £300,000. However, as the accumulation of interest on the Lifetime Mortgage could exceed the amount of tax saved, this should be seen as a secondary benefit, which may help reduce the overall cost of the scheme, and not as the sole purpose for taking out equity release.
All equity release products involve borrowing against, or selling all or part of your home, and may work out more expensive in the long term than downsizing to a smaller property, and may affect your entitlement to State benefits and grants. There may be more suitable methods of raising the funds you need.
Advice on equity release schemes
There are three different ways of releasing equity without monthly repayments:
- Lifetime Mortgages
- Reversion Schemes
- Home Income Plans
Lifetime Mortgage schemes are only available to people over 55 (or in the case of joint applicants, both are over 55), Reversions usually only if over 65 and Home Income Plans are normally only effective if you ar 75+. Should you be under 55 or prefer to make monthly repayments to stop the loan building up there are also:
- Interest Only Mortgages (these are also available even for the retired)
Your home may be repossessed if you do not keep up repayments on your mortgage.
For researching and arranging the best Interest Only Mortgage scheme for you, we will make a charge. This can be paid by you either as a fee, usually 0.5% of the loan payable on application to the lender, but subject to a minimum of £500 and any commission we receive from the lender will be refunded to you, or a combination of fee and commission, so that the total remuneration received would not be less than £500. We would retain any commission received from the lender towards this fee. Where the commission received is less than £500 you would pay a fee for the balance on completion.
For a comparison of the various equity release schemes click here.
With an increasing number of providers and so many different schemes to choose from, it is becoming increasingly important to get independent advice on what is the best way of releasing equity in your particular circumstance. The equityRelease Centre provides expert advice to help you decide which type of scheme is most appropriate for your needs. Our experts ensure that you receive relevant advice on the best available schemes selected from the UK's most reputable insurance companies.
If you would like advice please complete our equity release enquiry form and one of our trained consultants will call you back shortly. Alternatively please feel free to phone the equityRelease Centre Centre on 0118 957 2677 or click through to our Equity Release Centre home page and follow the links from there.
You will always receive courteous service in the strictest confidence from highly trained staff who all value your custom. Your business will be dealt with in a friendly, efficient and personal manner at all times.
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