As a homeowner aged over 55, you could tap into some of the equity tied up in your property to help boost your finances.
The tax-free cash released from your home can be used for many things from making home improvements to helping a loved one with a financial gift or even paying off existing debt.
But many are still unsure how it all works. Here are our top 7 equity release tips you need to know.
Consider your options
Equity release is one way to help boost funds in retirement, but it’s not always right for everyone. Our expert equity release advisers will always ensure you consider your options at your initial appointment.
Funding options they may suggest you consider include:
- Downsizing – Selling your home to move to a property that may have less associated costs
- Alternative borrowing – Perhaps a conventional loan or mortgage may suit you better
- Using savings and investments – Taking your personal finances into account to see if there’s room to fund what you need
- Assistance from family members – Should your loved ones be able to help you financially
- Claiming all available benefits – Ensuring you are claiming all the benefits you are entitled to
Low interest rates
As well as there being a whole host of flexible options available when it comes to equity release plans, the average interest rates also remain low. With a lifetime mortgage, the most popular form of equity release, the interest rate can be fixed for the life of the plan too.
You can get an idea of how much you could release from your home and potential interest rates with our free online calculator.
Whereas releasing a lump sum of tax-free cash from your property may suit those wanting to use it on a large, specific purpose such as gifting to a family member or making home improvements, there is another option. With a drawdown lifetime mortgage, after releasing an initial lump sum, you can then release cash as and when you need it.
Involve your family
It’s entirely your decision, but we always recommend talking to your family before considering equity release. In fact, you can even ask them along to your appointment should they have questions.
It doesn’t even have to be a family member, you can involve a trusted friend too. However, if you’d prefer to speak to us alone, we’ll always respect your decision.
Think about your future
Is there a possibility that you may want to downsize your home in the future? Is leaving an inheritance important to you. It’s important to discuss this with your adviser, as they will take these circumstances into account when finding the most suitable plan for you. That may include downsizing or inheritance protection.
Rest assured, all of our plans meet the Equity Release Council standards, meaning you can move home and transfer your existing plan to your new property, subject to criteria. Also, if your circumstances change in the future, you may be able to switch your equity release plan to one that suits you better (subject to lender criteria).
If you’re thinking of releasing equity from your home, the first thing to understand is that it’s a requirement of the Financial Conduct Authority (FCA) that you receive regulated advice to make sure your interests are protected.
Advice that suits your needs
At Mortgage Advice Bureau Later Life, our advice is unique to you and delivered by expert equity release advisers. We’ll make sure you have all the facts and understand your options before you decide to go ahead.
We'll always do what’s best for you, whether that’s taking advantage of some of your property’s value through equity release or not.
Mortgage Advice Bureau Later Life offer lifetime mortgage products from a carefully selected panel of providers.
Look into how much you could release from your home with our simple, free-to-use equity release calculator.
Things to consider
A lifetime mortgage is the most popular form of equity release and a loan secured against your property.
With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. Usually, that’s when you, or the last remaining applicant, either passes away or moves into long-term residential care.
With a lifetime mortgage you’ll still retain full ownership of your home.
You should always think carefully before securing a loan against your home.
Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.
Unless you decide to go ahead, our service is completely free of charge as our usual advice fee of 1.5% of the amount released would only be payable on completion of a plan, subject to a minimum advice fee of £695.