See them happy now
Typically, we all work our way through life to provide for ourselves and those around us. And when our time comes to an end, we leave behind what we can in hope that it contributes towards helping and supporting those that matter most to us – our family and friends.
However, wouldn’t it be better if you could help them when they need it most and see the benefit it makes today, not just in the future when you’re no longer around?
Using equity release to help family and friends
Equity release is a financial option that allows you to unlock some of the funds tied up in your home.
It comes in two forms; a lifetime mortgage – which is the most popular form of equity release and has many features available, such as no monthly repayments unless you choose to make them and retaining full ownership of your home – and a home reversion plan.
By taking equity release, you could provide the financial support your family and friends need now, rather than waiting until the future. That could be helping with regular bills, gifting some money towards a deposit on a new home, paying university fees or getting a family member on the road with a new car.
So, whatever the requirement, equity release could make a difference, with the added bonus of you still being around to see it.
Using a lifetime mortgage to help family and friends
A lifetime mortgage is one way to unlock tax-free cash from your property. It’s a loan secured against your home – like a regular mortgage – however, there are no monthly repayments for you to make unless you choose to.
With a lifetime mortgage, you still own your property, and can live there for as long as you wish, meaning you can support those who matter most without having to raise the funds by downsizing or moving out of an area you love.
That’s because the loan, plus roll-up interest, is usually repaid when the plan ends and your property is sold. That usually takes place when the last remaining applicant either passes away or moves into long-term care.
However, that doesn’t mean you can’t leave something behind for your loved ones when the time comes. As with some plans, you’re able to protect a percentage of your home’s future worth to leave as an inheritance.
As well, with a lifetime mortgage, you don’t have to take all the money in one go. You can choose to take it in one lump sum, or if you’d prefer, release an initial lump sum and save the rest for later – giving you extra financial security for the future. Not all drawdowns are guaranteed.
Benefits of a lifetime mortgage
- You can unlock some of your home’s value to help family and friends
- All of the money you release is tax-free
- You don’t have to make monthly payments unless you choose to
- You retain full ownership of your home and can stay in it for as long as you like
- You don’t have to take all your money in one go – you can save some for a later date following an initial lump sum release
- You’ll never owe more than the value of your home
- You can still leave a percentage of your home’s future value as part of an inheritance with some plans
Drawbacks of a lifetime mortgage
- Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits
- Your lifetime mortgage interest will roll up and compound
- You could face considerable early repayment charges if you repay your plan early
See how much you could release
See how much tax-free cash you could unlock from the value of your home with our free equity release calculator.
Using a home reversion plan to help family and friends
A home reversion plan also allows you to use some of the funds tied up in the value of your home to support your family and friends.
However, with a home reversion plan, instead of unlocking cash by securing a loan against your property – as you do with a lifetime mortgage – you sell part or all of your home to a reversion company for a cash lump sum. That means you no longer own your home.
There are no monthly repayments to worry about, you can live in the property for as long as you wish, and you could still leave an inheritance if you don't sell all of your property to the reversion company.
Also, a reversion company won’t pay you market value for the portion you sell, meaning you may have to sell a bigger stake in your property to raise the funds you need.
Mortgage Advice Bureau Later Life do not offer home reversion plans, and offer lifetime mortgages only.
Benefits of a home reversion plan
- Receive a tax-free cash lump sum to help family and friends
- No monthly repayments
- No interest added, as it’s not a loan
- Can stay in the property for as long as you wish
- You can still leave an inheritance by only selling part of the property
Drawbacks of a home reversion plan
- You will not receive your home's full market value on the part you sell to the reversion company
- It can be costly if you want to buy back the portion of the home you have sold to the reversion company
- It reduces the value of your estate and may affect your entitlement to means tested benefits
We’re here to help you find the right option
If you’re thinking about taking out equity release on your home, you’ll likely have a lot of questions. That’s natural; it’s an important decision that you should think about carefully.
It’s why we’re here to help. We understand equity release doesn’t suit everyone’s needs, and we’ll never recommend it unless we’re certain it’s the right option for you.
We also don’t charge for our services unless you decide to go ahead. So, you can find out if equity release is a suitable financial option for you before facing any fees.
See how much you could release
See how much tax-free cash you could unlock from the value of your home by using our quick and easy lifetime mortgage calculator.
Things to consider
- 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.
- Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
- Mortgage Advice Bureau Later Life offer lifetime mortgages only, which is a loan secured against your home.
- Mortgage Advice Bureau Later Life offer lifetime mortgage products from a carefuly selected panel of providers.
- 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.