Equity Release

Equity Release advice for Alresford, Winchester and surrounding villages.

We are members of the Equity Release council and adhere to their strict code of conduct. Our listing is confirmed here:https://www.equityreleasecouncil.com/company/money-ways-advised-financial-limited/

Equity release is similar to a mortgage but the debt doesn’t have to be repaid and the amount that can be borrowed is not related to credit score or income.

In simple terms the more you borrow as a percentage of the value of your home the higher the interest rate & the older you are the more you can borrow against the value of your home. There are many myths and misconceptions about equity release but the following maybe of help.

Equity Release FAQ’s

What is Equity Release?

There are two types of equity release; Lifetime Mortgages and Home Reversion plans. Both of these are regulated by the Financial Conduct Authority. By using an equity release product, a home owner can draw a lump sum or regular smaller sums from the value of their home, while remaining in their home.

Equity release can play a crucial role in retirement funding and the flexibility and safeguards which are built into plans that complies with the Equity Release Council product standards enable thousands of home owners every year to tap safely in to their housing wealth without having to worry about making monthly repayments.

If you are thinking of taking out an equity release plan then you need to find out as much as you can about your options and weigh up the advantages and disadvantages fully before you decide if equity release is right for you. We are dedicated in helping you to understand the steps involved and talk you through all the options, the effects this might have on state benefits and tax and your obligations. And of course, we can also explain the full benefits of equity release.

Done correctly, equity release should have no impact on an individual’s tax position or their state benefits; however, each individual’s circumstances need to be assessed.

Part of a customer’s choice will be over the type of plan required. In the modern equity release market, there are a range of products to choose from, with new and innovative products being created regularly.  This means that whatever your equity release needs, there is likely to be an equity release plan available to meet them.

You can choose whether you want to pay the interest regularly, at ad hoc intervals or not at all.

We will help source the best product for you reviewing the interest rates, minimising and charges & where possible sourcing free valuations.

You will have no upfront costs wherever possible.

We have further information on the main 2 types of equity release or please get in touch and we can answer any questions you might have. Get in touch here.

What are the most common uses of equity release?

• Pay off existing mortgage/debt
• Pay for once in a lifetime holiday
• Early inheritance for children
• Helping children/grandchildren with a deposit for house purchase
• Fund lifestyle in retirement
• Pay for grandchildren university fees/student debt.
• Remodel the house/home improvements

What are the alternatives to Equity Release?

Before taking out an equity release plan, you should check what the alternatives are. You could visit moneyadviceservice.org.uk/debt for advice on debt. For instance, you may have other investments, savings or assets to draw on, or you may wish to continue some form of paid work. You could downsize to a smaller property or one of lower value – perhaps by moving to a different part of the UK where house prices are cheaper.

Downsizing is likely to give you maximum value from your home, but you may decide that you do not want to leave your home or move away from family and friends and you should consider the cost of moving. You may also want to think about renting a room in your home, or taking a loan from family and/ or friends.

Ultimately you will need to weigh up all the alternatives and, along with help and advice from your financial adviser, decide whether any of these alternatives meet your requirements.

Will I still own my home?

With a lifetime mortgage you will still own your home and have the flexibility to move and take your equity release loan with you without charge in most cases.

With Home reversion plans, which I do not advise or provide, you sell your property to a lender.

We feel this is not in our client’s best interest and better products have replaced this old-fashioned plan which has received negative press in the past for obvious reasons.

Will I have penalties to pay the equity release loan off?

If you pay the loan off early due to a windfall for example, then penalties will need to be paid.

However, if you move home the loan can usually be moved without penalty. There is also no penalty when the loan is paid back under the terms of the offer on death or admission to care home of the last survivor.

How is the loan repaid when I die?

In the event of the last survivor dyeing, the loan needs to be repaid from the sale of the property or any other legal source, for example from investments held by the children/beneficiaries.

A popular misconception is that the loan needs to be repaid within a very short period of time. This is not true; the lenders understand it is an emotional time and will normally leave a year or so before they offer help. Remember, they are charging interest so they have no immediate need to rush anyway, paying it back is on your terms.

Can I pay the interest every month or on an ad hoc basis?

Yes, depending on the lender and the type of plan you could either make regular monthly payments or ad hoc payments when you wished. Some plans will even let you pay off up to 10% of the equity loan as well.

We are happy to advise on this on an individual basis.

Do I need permission to make changes to my home?

If you want to make decorative changes, including painting/decorating, carpets/flooring, addition of a conservatory, bathrooms or kitchens you do not need to notify anyone.

If you are planning on making substantial structural changes you will of course need the relevant building permissions from the local authority and the equity release lender will expect to be notified. This is no different than a normal mortgage.

What can I spend the money on?

You can spend the money on any legal reason but not for business purposes.

What are the most common uses of equity release?

• Pay off existing mortgage/debt
• Pay for once in a lifetime holiday
• Early inheritance for children
• Helping children/grandchildren with a deposit for house purchase
• Fund lifestyle in retirement
• Pay for grandchildren university fees/student debt.
• Remodel the house/home improvements

Am I eligible for equity release?

You need to be a homeowner and the youngest applicant needs to be aged at least 55 years old to qualify with a house value of at least £70,000.

Do I need to find out how much my house is worth?

This will help you to establish how much you might be able to release.

We are able to help establish this for you through our local connections and online searches.

Will equity release effect my state benefits?

Any money you release from your home may have an impact on the benefits to which you are entitled. A financial advisor can advise you on how to work out what impact this might have for you.

However, done properly there is unlikely to be any effect on any benefits you receive.

Will the equity release effect my taxation?

Any equity you release from your home is tax-free. However, if you choose to invest the money you release any interest you receive may be taxable and may affect your tax position. We can help you to determine what impact this will have on your tax position.

It is seldom advisable to take equity out of your home if the reason is solely for future investment purposes and we are happy to explain why.

Equity Release Council