Equity Release Schemes

• Age 55 upwards (the older the client, the higher the potential borrowing)
• Client remains the legal owner of the property & does not become a tenant
• Schemes are available with free valuation & legal fees
• Equity can be released for virtually any legal reason such as repayment of an expired mortgage, home improvement, income top up etc.
• Income is unimportant as monthly payments are not normally required
• Long term fixed rate deals, however the client will never be asked to leave the property at the expiry of the term. The client leaves the property either by choice, death or moving into long term care. The property will then be sold, the equity release mortgage repaid & any remaining capital will revert to the client or the client’s estate
• Adverse credit acceptable
• Interest rates are currently at historic lows
• For clients who are cash poor but asset rich
• Schemes offer a “no negative equity guarantee” i.e no matter how long the client lives, the loan will never exceed the sale price of the property
• Money can be raised on an existing property or to complete a purchase
• Usually portable
• Used as a form of inheritance tax planning
• Part or full repayment options are available
• Agreed drawdown facility for future requirements without the need for a new application

Equity Release Options

The lifetime mortgage is the single most popular equity release product in the UK, accounting for around 99% of all equity release products provided by lenders.

With a lifetime mortgage, you take out an entirely new mortgage on your property but retain full ownership of it in the same way as you would with a standard mortgage product. An equity release mortgage enables you to free up some or all of the equity you have tied up in your home, after which the total loan balance along with all interest and borrowing costs are repaid when you die, when you move into long-term care or when you decide to sell.

Equity release schemes have advantages and disadvantages like most financial products, which should be discussed in depth with an independent adviser before going ahead.

Before Applying Take Note:

• A specialist equity release mortgage could be more expensive than a conventional mortgage and charged at a higher rate.
• You cannot access all the equity tied up in your property.
• An equity release scheme may have restrictions as you may be unable to perform certain home improvements or works without seeking permission.
• While the money accessed through an equity release scheme is 100% tax-free, it may affect your entitlement to state benefits. Equity release will also reduce the value of your estate to be passed on to your beneficiaries after your death.
• Some equity release schemes have high exit penalties when the mortgage is repaid.