Eight expert equity release tips

Releasing the cash from your home is a big financial decision, so it’s important you get all the facts to make an informed one. Here’s eight tips from our expert advisers to help you.

1. Think about how much you need to borrow

You should only borrow for the things you need, as the amount that you take out will accrue interest. Whilst you can use equity release for any purpose, it is important you make a detailed list of what you want to spend the money release on, including when you need the money.

Your adviser will go through your spending plans with you, as this could influence the type of plan that best suits your needs. If you don’t need all the cash straight away then your adviser will likely recommend a drawdown lifetime mortgage, which enables you to take out an initial amount, and then release further funds as and when you need to. Whereas, if you need the money all at once you could opt for a lump sum lifetime mortgage.

2. Talk to your loved ones

We always recommend that you talk to your loved ones about your financial needs, goals and plans. Not only could they offer a financial solution instead of equity release, but it’s important that you all understand how equity release will affect potential inheritance.

Inviting your family to your appointments gives them the chance to understand equity release and ask any questions they may have. We do appreciate though that this is sometimes an uncomfortable conversation, so if you’d rather not include anyone else, we’ll always respect your decision.

3. Explore your alternatives

Part of our advice process is to help you to explore your alternatives, as we know that equity release isn’t right for everyone. In fact, we only ever recommend equity release if we’re sure that it’s the best financial decision for you. Some alternatives that your adviser will suggest include:

• Moving/ downsizing – selling and moving to another cheaper property
• Using savings or investments – think about your personal finances
• Other borrowing – consider other forms of borrowing such as an unsecured loan, credit cards or mortgage
• Assistance from loved ones – your loved ones may be able to help
• Claiming all available benefits – make sure you’re getting all the benefits you’re entitled to

4. Get independent advice

The first step to releasing the cash from your home should always be to get advice from a specialist adviser. It’s a regulatory requirement and you can’t take out an equity release plan without advice.

Amongst many other things they will explain how the cash released could impact your eligibility for means-tested benefits, immediately, or in the future. Our advisers will undertake a full benefits assessment during the equity release process to ensure you know exactly how you will be affected.

It’s important that you check if your adviser is, not only fully qualified and experienced in equity release, but also has access to plans from the whole of the market. This means that rather than being tied to only recommending plans from one lender (or a handful of lenders) they search the entire market to find the right plan for you. This is the only way to guarantee that you will be recommended the best plan for your circumstances.

It’s also important to ask about the advice fee, as these vary greatly by adviser and by company. Our adviser will help you to decide if equity release is right for you, without obligation and without it costing you a penny. Should you decide to go ahead we offer UK whole of market advice which we charge a fixed fee of £995 for, payable only on completion.

5. Consider making payments

Making regular repayments is an effective way of reducing the long-term cost of a lifetime mortgage – the most popular form of equity release. Some plans allow you to make partial repayments or interest payments. Any payments you can make can reduce the long-term cost of borrowing and, as they are voluntary, there is no penalty should there come a time when you can’t afford to or no longer wish to make payments.

6. Think about your future

If you believe you may wish to move home after taking out an equity release plan, this is something you should discuss with your adviser. All the plans we recommend meet the Equity Release Council standards, meaning (that as well as other safeguards) you can move home and transfer your existing plan to your new property, subject to criteria.

Some of our equity release plans come with inheritance protection, which enables you to ring-fence a portion of your home’s future value to guarantee an inheritance for your loved ones. If you have family, and leaving them an inheritance is important to you, these plans can offer a way to release equity while guaranteeing some of your future property value is available to be passed on to your beneficiaries, as equity release will reduce the value of your estate.

7. Take your time

Life changing financial decisions require careful consideration and specialist advice. Our advisers are here to help you understand all the options available to you and give you honest, impartial advice. They will always be on hand to answer your questions and you will never feel under any pressure or obligation to proceed.

8. Know what to expect

Throughout your equity release journey your dedicated adviser will be with you every step of the way. You can expect the process to involve:

• Step 1: Fact find adviser call – your adviser will talk you through the ins and outs of equity release and answer any questions you may have. This will include discussing your alternatives and making sure they fully understand your current financial situation and future goals.
• Step 2: Your personalised recommendation – if both you and your adviser agree that equity release is right for you, we’ll search hundreds of plans from the whole market to find the best plan for you. This personalised recommendation will be posted out to you for you to read at your leisure.
• Step 3: Advice call – your adviser will arrange a convenient time to talk you through your recommended plan. It will include the amount you could release, the plan’s features and benefits, interest rates and its terms and conditions. They’ll also answer any questions you might have.
• Step 4: Your application – after speaking to us, if you’re then happy to go ahead, your adviser will submit the paperwork to the lender on your behalf. Your chosen solicitor will be instructed, and your property will be valued.
• Step 5: Your offer and legalities – following your valuation you will receive an offer from the lender. After that is signed it’s just a case of letting the solicitors do all the legalities and getting your completion date. They will also arrange any fees to be paid and if you are paying an existing mortgage off this will be done in the same transaction too.
• Step 6: Your cash arrives in your bank.

Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property. To understand the features and risks, ask for a personalised illustration. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.