What age can I take out an equity release plan?
The minimum age to be eligible for a lifetime mortgage is 55 and 60 (or 65 with most providers) for a home reversion plan. Usually the older you are, the more cash you can release.
There is no upper age limit, however your options may become limited over a certain age as some lenders will not lend to anyone over 90.
How much does my house need to be worth?
To qualify for equity release, your home must be worth at least £70,000, be in the UK and be your main residence.
Do I have to pass any credit or affordability checks?
Equity release plans are secured against your home and are not dependent upon repayment ability. This means that good credit history is not essential, nor the ability to pay back the mortgage. Nevertheless, some plans available may be restricted if you have an adverse credit record. Always make your adviser aware of any credit issues.
Are all properties eligible for equity release?
Like a standard mortgage your property will have to pass the lender’s criteria – this varies by provider. Some things which could cause a problem (or limit your options) include: non-standard construction e.g. timber frame; single skin brickwork; flat roof; short lease term; overhead power line; commercial premises close by and flood risk.
Your adviser will ask all the relevant questions to be able to advise on whether your property is eligible.
Are there any restrictions on what I can do with the money released?
No, you can use the cash anything you like – but think carefully about how much you need to borrow as this could affect the legacy you leave to your family.
Can I do equity release if I still have a mortgage?
Yes, you can. But if you take out a plan, your existing mortgage will need to be repaid as part of the transaction. You may of course be able to borrow surplus funds for other uses.
Will I have to pay tax on the money I release?
Any lump sum or income you receive through equity release is tax-free, being a release of capital from your home. If you are gifting monies from the proceeds of equity release to family members, this can have implications on your estate planning and their income taxes.
Is equity release safe?
Equity release is regulated by the Financial Conduct Authority (FCA) whose primary role is to protect customers and enhance the financial market’s integrity.
All the plans that we recommend are approved by the Equity Release Council which means they come with the following safeguards:
- You will never have to repay more than your home is worth
- You can remain in your home for as long as you wish
- You can move home whenever you want (subject to criteria)
Will I still own my home?
Yes, if you purchase a lifetime mortgage, you’ll still own your home and can stay in it for as long as you like. With a home reversion plan you sell a percentage of your home to the reversion company.
Can I fall into negative equity?
No – we only recommend equity release plans that are endorsed by the Equity Release Council and qualify for their no negative equity guarantee.
Can I move home?
Yes – like a conventional mortgage, Equity Release Council approved lifetime mortgages can be transferred to a new home, subject to criteria.
Can I still leave an inheritance for my family?
Yes, you can. Some equity release plans guarantee a set percentage of your home’s value, at the time your plan ends and will be retained and passed-on.
What are the costs if I proceed with a plan?
- Valuation – Free valuations are available with some plans
- Solicitors fees – you are free to engage your own solicitor of course, if you use our recommended firm their fees are £575 plus vat & disbursements, they’ll come & visit you at home to give you the requisite legal advice
- Lenders arrangement fees – normally free as the market is very competitive, however, sometimes a better rate is available with a lender fee which can be anything up to £950. We will, of course, offer you all options.
- Advice fee – is a fixed fee of £995 payable only upon completion & can be added to your loan, this offers a saving of at least £500 against many of our competitors who charge a percentage of your borrowing which can be very expensive.
What types of equity release plans are there?
Do you handle the legal side of the process?
The choice is yours. We can appoint a legal representative for you, that will deal with all the necessary details. If you already have a relationship with a solicitor, then we are more than happy to work with them.
What happens when I pass away?
With a lifetime mortgage if you live on your own, then the property will be put up for sale and any monies recovered will be used to pay off the loan and the remainder left to your beneficiaries. If you live with a surviving partner, then your partner can continue to live in the property, but the equity release plan will continue until the second death. Once they pass away, the property is sold.
Any sale proceeds will be used to pay off the debt and again the remainder left to your beneficiaries.
How is my home’s value assessed?
An independent RICS registered surveyor assesses the value of your property so you can be confident of an unbiased opinion of your property’s worth.
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