Crucial financial advice when considering withdrawing capital from your home
For a lot of people their home is their biggest, or only financial asset. If you are over the age of 55 and need to raise cash for any reason, you might be able to use an Equity Release scheme to tap into the equity built up in your property and withdraw it as cash.
Equity Release schemes are designed for older homeowners who are likely to struggle to take on a regular mortgage, having little or no income to make regular repayments. There are two main types of equity release schemes you can consider:
These schemes enable you to take out a loan on your property in return for a tax-free lump sum, a regular income, or a combination of the two. You will still own your property. With most schemes, you won’t be making monthly repayments so the loan is only repaid when you die or go into long-term care.
The minimum age for most Lifetime Mortgages is 55.
Home Reversion Plans
With these schemes you sell all, or part, of your property in return for a tax-free lump sum or a regular income, while still having the right to keep living there. When the property is eventually sold, you will only receive the percentage of the property’s value you still own. For example, if you have sold 60% of the property, you will only receive 40% of the final sale price. The minimum age for most Home Reversion Plans is 60.
Withdrawing equity from your home can potentially impact your finances in ways you might not expect or anticipate, so taking financial and legal advice is absolutely crucial.
Here are just a few things worth considering before going ahead with any kind of Equity Release scheme:
- Equity Release can affect your eligibility for means-tested benefits to the value of your estate when you die so you need to understand and plan for any negative financial implications.
- Have you already claimed all the state benefits you are eligible for?
- Are there any alternatives you can consider? Do you have any other savings or assets? Have you thought about renting-out a room in your home?
- If the reason you need to raise money is to make alterations to your property because you are now less mobile, there might be funding available – it is worth talking to your local authority.
- An Equity Release scheme will reduce the value of the estate you leave your family when you die, so you might want to talk to them about it.
- For lots of people the most effective way of releasing equity is to simply downsize to a smaller property.
Equity Release schemes can definitely be a great solution for some people, but they won’t be right for everyone. As you can see, there are lot of factors to take into consideration. To be confident you are making the right decision for you and your family, why not talk to our specialist Adviser who will make sure you know all the facts and help you consider all the options concerning equity release.
AN EQUITY RELEASE PRODUCT WILL REDUCE THE VALUE OF YOUR ESTATE, WILL NOT BE SUITABLE FOR EVERYONE AND MAY AFFECT YOUR ENTITLEMENT TO STATE BENEFITS. TO UNDERSTAND THE FEATURES AND RISKS PLEASE ASK FOR A PERSONALISED ILLUSTRATION.
- Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
- Our fees and charges vary depending on the Services we provide to you. We charge a fee of up to £1000 payable at the outset. Our typical fee is £750.