Equity Release Explained
The equity in a property is its value less any mortgage/s secured on it. In many cases this equity is one of the most valuable assets owned by a person or couple. Equity Release is the general name given to a range of financial products that convert that equity into cash for the owner to use to enhance their lifestyle. Click each of the below tabs to learn more about how Potter & Ford can support you with Equity Release. Learn more about our equity release services here.
The following list shows a few common examples of, once they have successfully made an Equity Release application, how homeowners use the released funds. This list is not exhaustive as we very much appreciate that everyone is different. Every applicant will have their own unique situation and requirements which may be to achieve just one or many different goals:
– Repayment of a mortgage to increase monthly income
– Fund holidays and travel
– Maintain or improve the home
– Provide funds to help a family member buy their home.
– Purchase a new, more suitable home themselves.
– Car replacement.
– Supplement pension and/or investment income.
– Reduce the value of the estate and save on Inheritance Tax.
– To provide the money for a private healthcare and/or operation to avoid a lengthy waiting list.
– Just to have some money to spend as you want, when you want. As some people put it, ‘to enjoy my money whilst I am alive’.
Equity Release Plans were designed to meet these requirements and they usually have the following common factors:
– The age of the youngest applicant is at least 55.
– A guaranteed tax-free cash sum or income for life is paid.
– Applicants own and liv in their property which is build using standard construction materials
– Applicants continue to live in their home for as long as they wish.
– There are no repayments required until the home is sold, normally after the death of the last surviving applicant or their entry into long term care.
– Applicants have the freedom to move to a suitable property in future should they so wish and have the equity release plan transferred to your new home (subject to meeting lenders criteria).
Before considering Equity Release homeowners should consider the following alternative solutions to their funding needs:
– Move to a less expensive property and use the surplus funds to meet income or capital needs.
– Use any existing resources, such as savings and/or investments.
– Obtain assistance from family, grants or unclaimed State Benefits.
– Do nothing and continue as you are.
– Once the alternatives have been considered and discounted the questions to ask yourself include:
– Are you prepared to use the value locked up in your home?
– Have you gathered sufficient information to enable you to make a decision that you and, importantly your family, are happy with?
If you have reached this point, you might be thinking why you didn’t consider this sooner but this is certainly the time to obtain the independent and impartial advice we provide to ensure you can make an informed decision about whether to proceed to an application.