ANSWERS TO SOME OF THOSE BURNING QUESTIONS...
Q Will I still own my property? A Yes, if you take out a lifetime mortgage. But with a home reversion plan, the reversion company will own all or part of your property. Both plans let you continue to live in your home for your life – or until you go into full-time care.
Q I’m thinking of taking out an equity release plan to give me more cash during my retirement. Will this affect the pension credit I get? A As pension credit tops up individuals on low incomes, this could affect how much you get. £1 of pension credit is deducted for every £500 or part £500 of savings or investments you have over £10,000. Make sure you get professional advice.
Q How much will I actually owe? A That depends on the type of plan, how much you borrow, how long you have the loan for and the rate of interest and fees you need to pay. There are usually no monthly repayments with Lifetime Mortgages. Interest is added to the loan over its lifetime, with the full amount owing payable when the property is sold.
Q My mum is thinking of taking out an equity release plan. She has a small mortgage outstanding. Can she apply a certain amount of cash and can she make monthly repayments? A There are two equity release options. The first being a Lifetime Mortgage where you take out a secured loan on your property. You can choose to ring-fence some of the value of your property and you can choose to make repayments or let the interest roll up. The second is a Home Reversion Plan where you sell part or all of your home in return for a lump sum or regular payments. Your mum can make repayments but needs to check about charges.
Q I have an interest-only mortgage. Can I take out an equity release plan? A It will depend on the value of your home and the amount outstanding on your mortgage. All outstanding mortgages have to be repaid in full at the same time as taking equity release.
Q Are there any alternatives to using my home to raise cash? A You could consider downsizing to a smaller property or renting out a room under the Government’s Rent a Room scheme where you can earn up to £7,500 a year tax-free. Talk to your family to see if they can give you any financial assistance and make sure you are claiming any benefits you are entitled to. You’ll find a benefits calculator at turn2us.org.uk.