What is equity release?
Around 270,000 households have benefitted from equity release over the last 20 years, raising more than £12 billion in the process. More and more people now consider equity release as part of their financial planning for retirement.
Deciding on which plan is suitable for you can be complex and there are some associated risks to consider. So it is a good idea to seek financial advice before making your decision.
What equity release schemes can Acumen advise you about?
Lifetime Mortgages – With this type of equity release scheme you are not required to make any repayments over the life of the loan. Instead, interest is gradually added until repayment is taken at the end of your life or if you move to long-term care. You maintain ownership of your home and benefit from any future house price growth.
Home Reversion Plans – With this type of equity release scheme the provider buys a share of your property. When your home is sold, they then receive a share of the proceeds. You will always own your share of the property, which you can pass on to your family. You cannot reverse your decision and you will not benefit from any future house price growth.
Benefits of equity release?
- Being able to stay in your home
- Retaining your independence to make the most of retirement
- Releasing a cash sum that could make a difference to your retirement
Are you sure equity release is your only option?
Equity release is a lifelong commitment, one that we would only recommend after exhausting all other options. You should always consider alternative options before equity release.
These could include:
- Ensuring that you are claiming all benefits and grants entitlements
- Moving to a smaller property to release funds
- Seeking assistance from your family
- Protection from the Equity Release Council
The Equity Release Council is the industry body for the equity release sector, which works to ensure that products are safe and accessible for consumers. It represents providers, qualified financial advisors, lawyers, intermediaries and surveyors who work in the equity release sector.
Case Study for Equity Release/Lifetime Mortgage
Audrey Jones, 69, had recently been looking at ways of improving her financial situation and maintaining her standard of living. She also wanted to help her children financially. She therefore started looking into the possibility of equity release to help her situation.
At first there was some trepidation, as Audrey saw the equity release market as ‘a minefield’. However, after spending much time discussing her personal and financial situation, along with her future aims and aspirations, with her family and financial adviser she felt confident that she was making the right decision.
This lifetime mortgage met her requirements perfectly, allowing Audrey the initial cash lump sum she required. Audrey also liked the Repayment Option allowing repayments of up to 10% per annum of the amount borrowed, which could help her reduce the roll up of interest.
Not only that, but if Audrey does decide to downsize and pay off her loan in full after five years, she can do so with no early repayment charge.
Overall, Audrey feels that taking out the plan has really made a difference to her lifestyle. She has been able to meet all her aims and she now feels she has no ‘money worries’ for the future.