Safer ways to unlock your home’s value
IF you own your home, then one way to realise some of its value is through equity release. Some people admit to being put off by equity release because they think that a plan will prevent them from being able to leave an inheritance. This does not have to be the case. Of course, not everybody wants to, or is able to, leave their entire home’s value to their younger generations.
For some, the equity in our property is a lifeline to keeping afloat in retirement. For others, the money tied up in our bricks and mortar is ours to enjoy after years of working to pay off the mortgage.
By its very nature, having an equity release plan will reduce the amount of inheritance you leave, as you are unlocking and spending some of the capital from your home’s value.
But today’s wide range of plans offer several ways for you to protect some of the remaining equity as an inheritance for your loved ones.
Your inheritance protection options include protected equity guarantee and plans. interest payment
Modern lifetime mortgages have a security option built into them which is called the “inheritance protection guarantee”.
Many leading equity release providers offer this safety feature.
It works by enabling you to select a percentage of the property value that you want to protect. The higher the percentage, the smaller the maximum loan amount available.
For instance, if you wish to protect 30% of your home’s value as an inheritance for your family, then the maximum amount your provider will allow you to unlock will be reduced by 30%.
Some equity release plans now offer the flexibility of voluntary payments to reduce or prevent interest from accruing on your loan.
These payments can be made as and when you wish, or with some plans, paid regularly by standing order.
The difference between this and a traditional lifetime mortgage is that, rather than interest rolling up over the life of the plan (compound interest), payments back to your provider are made to reduce or prevent the interest from accruing.
In some cases, you could even repay the loan plus interest in full.
For many of us it is important that we’re able to leave an inheritance for our loved ones when we’re gone.
After dedicating our lives to looking out for those closest to us, the money we leave behind is our final gift to them; but don’t rush into a decision.
If you are thinking about unlocking some of your home’s equity to boost your retirement finances then it is so important to speak to an independent specialist first.
Call Age Concern Liverpool & Sefton on 01704 542993 to arrange a no obligation discussion with our expert equity release provider.
They are members of the Equity Release Council, so you can rest assured that you will never be in a negative equity position or at risk of losing your home.