What is equity release?
With the rising cost of everything from everyday items such as milk, to holidays and home improvements, now is an important time to get your finances in order so that you can plan for the year ahead.
Homeowners aged 55 or over who are looking for some additional money, have the option of unlocking tax-free cash from their home on a fixed rate of interest for life and with no requirement to make repayments.
Known as equity release, it is often used to plug a gap for people who might have a shortfall in their pension savings as they approach, or are already enjoying, their retirement.
For most of us, our homes are our most valuable asset, and if you’ve owned it for a number of years, it’s likely to have increased in value and could mean you are sitting on a large amount of equity.
Make your retirement more comfortable
The most popular form of equity release, a lifetime mortgage, also allows you to continue to own 100 per cent of your home.
The amount of money that you can access is determined by the age of the youngest homeowner and the value of your property, meaning you need to be at least 55 years old to consider equity release and your property must be worth at least £70,000.
How does it work?
The money that you release, plus the interest that you accrue over time, is repaid when you die or go into long-term care and your property is sold.
The rise in popularity of equity release over the years means that there are now a wide range of plans available on the market.
Whilst you are not required to make any repayments, there are now plans available that allow you to pay off some of the interest each month and you can choose the percentage if that is something that suits you. By paying a percentage of the interest, you can reduce the amount of debt that is being rolled up.
Protection for your loved ones
Equity release could affect potential inheritance and any entitlement to means-tested benefits both now or in the future.
Yet there are also plans available that allow you to safeguard a percentage of your property value so that you can pass this on to your loved ones.
You may also be concerned about passing on debt to your family, but all equity release plans come with a no negative equity guarantee which means that you can never pass on the debt to your estate,
providing the property is sold for a reasonable amount.
Boost your retirement income and live the life you deserve
According to Age Partnership, in 2022 37 per cent of customers used equity release to pay off their standard mortgage. This frees up money that would have otherwise gone on monthly repayments to give them the retirement that they deserve.
Get advice
It’s important to note that equity release may involve a home reversion plan or a lifetime mortgage which is secured against your property.
An Age Partnership equity release advisor will be able to explore all options with you, providing a free equity release quotation outlining how equity release could work for you and you’re under no obligation to proceed with anything that is recommended. To understand the features and risks, ask for a personalised illustration.
Equity release requires paying off any existing mortgage.
Only if you choose to proceed and your case completes would a fee of £1,795 be payable.
*Based on volume of plans, ISS data Q1-Q3 2022. Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB. We offer a range of equity release products from across the market.