Regulated Financial Services
Equity Release - Lifetime Mortgages - Home Reversion Plans - Whole of Market Access
FCA Regulated & Fully Qualified Professional Advice
Equity Release is an umbrella term relating to a number of financial products which allow home owners over a certain age (usually 55 minimum) to access the value (Equity) which has built up in their property by releasing the money in the form of a Mortgage.
There are several types of Equity Release Mortgage, all with differing features. Some of the main ones are described below.
Equity Release Mortgages are available to private owners, business people, those with Buy to Let properties and can even be used to purchase a property.
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.
NB: Equity Release is a Regulated Financial Product.
Advice must only be given by suitably qualified financial advisors.
To obtain your own FREE introductory Advice from
0ur in house Fully Qualified Adviser Call: 0330 2233 506
We provide initial advice for free and without obligation. Only if you choose to proceed and your case completes would a typical fee of 2.25% of the amount released be payable (minimum £1,695).
If you take out a Lifetime Mortgage, it will be secured on your property and you will retain ownership.
You can choose to ring-fence some of the value of your property as an inheritance for your family.
You can choose to make repayments or let the interest roll-up.
The loan amount and any accrued interest is paid back when you die or when you move into long-term care. Some lifetime mortgages now offer the option to pay all or some of the interest and some let you pay off the interest and capital.
Lifetime Mortgages vary from lender to lender, as do ordinary mortgages which is why taking professional advice which considers your specific circumstances, is essential.
You only continue to own your own home with a Lifetime Mortgage
Equity Release is one of the fastest growing financial product areas in the UK.
We are not tied to any particular lender, so you can access Equity Release products from the whole of the marketplace along with Professional advice to help you make the right choice for you.
Here are some of the items you can put your funds towards.
Pay off an Interest Only Mortgage
Help Children get on the Property Ladder
Private Medical Bills for a Health Concern
Invest Some Capital in a Business
Clear Unsecured Loans or Credit Cards
Make Home Improvements
Your Advisor will tell you everything you need to know about equity release including the effect on the amount of inheritance you can leave and if your entitlement to means-tested benefits could be affected now or in the future.
Home Reversion Plans
Home Reversion Plans are much less common than Lifetime Mortgages.
If you take out a Home Reversion Plan, you will sell all or part of your property to a lender who agrees to let you remain in the property until you die or go into long term care.
In return you will receive a lump sum or regular payments.
Home Reversion Plans vary from lender to lender, which is why taking professional advice which considers your specific circumstances, is essential.
Equity Release Council
Equity Release is a Regulated Financial Services product. The Financial Services sector is Regulated by the Financial Conduct Authority (FCA).
In addition the Equity Release Council (ERC) provides a voluntary framework of standards and practices which benefits both Equity Release consumers and the industry as a whole.
To be an ERC member lenders must offer, among other things, a 'No Negative Equity' Guarantee on their products. This means that when a mortgage is repaid, regardless of the amount outstanding it will never cost more than the value of the property to repay.
Therefore, there can never be an additional bill over and above the value of the mortgaged property, which gives borrows significant peace of mind.
Robert Linford is a Member of the Equity Release Council.
Click the logo above to see his Registration.
Here is a 'Ten Point list' of Things to Think About when considering Equity Release :
1) No Negative Equity Guarantee
This means if there isn’t enough money left when the property has been sold, there is a guarantee you do not have to pay any outstanding amount on the lifetime mortgage. In essence, you can’t go into debt beyond the value of your home. This is part of the Equity Release Council standard requirements for membership.
2) Set Up Costs
Advice and administration costs will usually apply. Consumers need to know what they are.
3) Age Limits
The minimum age for taking out Equity Release is 55. Research shows 40% of the products on offer are available to applicants with a minimum age of 55 with the remaining 60% being available to those aged 60 and over.
4) Amount You can Borrow
The amount of equity you can take out of your home will depend on your age, medical condition and the market value of your property. The loan-to-value (LTV) ratio varies between lenders and according to circumstances.
5) Interest Rates
With a lifetime mortgage it is important to understand that the interest on your loan is being rolled-up, so over time it can roll-up well beyond the value of the original lump sum taken out. Interest rates for equity release products can vary depending on the prevailing market conditions.
6) Interest Payments
Some plans allow the repayment of interest without charges being applied. This arrangement can vary for a fixed period or for the term of the mortgage. This can have a big impact on the debt because if you are servicing the interest each month, the debt will remain the same (as in an interest-only mortgage). Even if you pay a proportion it will negate the effects of interest roll-up.
7) Right to Remain in the Property for Life
You have the right to remain in the property for life or until you need to move into a care home. If you need to go into a care home, then currently the £23,250 asset limit for state help for care home residents applies. It is therefore important that there are legitimate reasons for taking out equity release. This needs to be documented to show that you have not deliberately deprived yourself of assets, thereby relying on the council to pay your care home fees.
8) Right to Move Property
All lifetime mortgage release products designed under the ERC standard are portable, provided you meet the terms and conditions of your providers contract, for example you may well be asked to reduce the level of your debt before moving to a lower value property. Portability might also depend on the type of property you intend to move to.
9) Drawdown or Lump Sums
You will need to decide if you want to release money in several payments or in one lump sum.
10) Early Repayment Charges
If you decide later on that you want to sell your house and pay off the lifetime mortgage, lenders will charge an early redemption penalty. There are two types of penalty; fixed (where you can calculate at the outset how much this would be), and variable (where the amount of penalty will be calculated based on investment returns at the time. The advantage of fixed early repayment charges mean that from the outset you know what you will be charged if you repay the loan early, with variable ones you only know the maximum you may have to pay.
NB: This may seem like a lot to know and it is!
It is for this reason you need a fully qualified and experienced guide to help you negotiate these areas.
You should be aware that even experienced and qualified Financial Advisers are not authorised to advise on Equity Release Products without taking (and passing!) a further examination in the Regulated Equity Release Market.
We can provide you with bespoke professional advice by a Fully Qualified Equity Release Adviser with access to products across the whole of the Equity Release Market.
In addition to our usual Face to Face Home visits:
*** We now offer CORONAVIRUS SAFE Virtual consultations by Telephone & Video Link ***
MANDATORY LEGAL INFORMATION
Robert Linford is a contracted Agent of Equity Release Associates Ltd.
Equity Release Associates Ltd is an appointed representative of:
Age Partnership Ltd 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB,
Age Partnership Ltd is authorised and regulated by the Financial Conduct Authority.
FCA Registered Number 917442. Company Number 12258392
Robert Linford and Age Partnership Ltd are Members of the Equity Release Council.