Cotswold Life

Un­lock­ing the value of your home

Over re­cent years, eq­uity re­lease has be­come an ex­tremely pop­u­lar way of boost­ing and sup­ple­ment­ing re­tire­ment in­come. As one of the more mis­un­der­stood prod­ucts out there, Laura Healy, eq­uity re­lease ad­viser at Fairview Fi­nan­cial Ltd in Chel­tenham, an­swer

- To find out more about eq­uity re­lease and dis­cuss your op­tions con­tact Laura Healy on 01242 697821 or eq­uity@fairview­fi­nan­ Visit www.fairview­fi­nan­ for more in­for­ma­tion. To un­der­stand all fea­tures and risks of eq­uity re­lease, please ask Business · Money Tips · Personal Finance · Lifehacks · Employment · Society · Financial Conduct Authority · Retirement

What is eq­uity re­lease and how can it help me?

Eq­uity re­lease is a way of re­leas­ing the wealth tied up in your home if you are aged 55 or over, while con­tin­u­ing to live in your prop­erty. You can re­ceive the money in one lump sum or smaller in­stall­ments, tax-free and with­out hav­ing to make monthly re­pay­ments (un­less you choose to do so).

The beauty of eq­uity re­lease is that it can be used for any­thing, in­clud­ing: home im­prove­ments, fi­nan­cial aid for chil­dren/grand­chil­dren, clear­ing both­er­some debts, or, sim­ply top­pin­gup your re­tire­ment in­come so you can en­joy hol­i­days, a new car or other treats.

Eq­uity re­lease used to have a stigma at­tached to it. How has this changed over time?

In re­cent years, the eq­uity re­lease mar­ket has ben­e­fited from ex­ten­sive prod­uct in­no­va­tion. For ex­am­ple, in­flex­i­ble plans have been phased-out and re­placed with a wider range of rel­e­vant prod­ucts to ac­com­mo­date the ever-chang­ing needs of re­tirees. It is now pos­si­ble to re­pay in­ter­est and/or cap­i­tal reg­u­larly, to pro­tect your es­tate and fu­ture in­her­i­tances. The growth in the mar­ket has fu­elled com­pe­ti­tion among lenders, re­sult­ing in lower in­ter­est rates and in­cen­tives such as free val­u­a­tions and cash­back, to help re­duce ini­tial costs.

What hap­pens if I need to move into long-term care at a later date?

If you have an eq­uity re­lease plan and re­quire long-term care, but you don’t have a part­ner en­ti­tled to live in the prop­erty, your home will be sold. Then, the amount bor­rowed, in­clud­ing in­ter­est, will be paid back to your eq­uity re­lease provider, with­out hav­ing to pay any early re­pay­ment charges.

You may also con­sider mov­ing in with fam­ily who can look af­ter you. If you think this may be a rel­e­vant is­sue in the fu­ture you must care­fully check you pro­posed eq­uity re­lease provider’s spe­cific terms - this is im­per­a­tive, as some will only al­low you to move in with fam­ily for med­i­cal pur­poses.

Can the amount owed ever ex­ceed the value of my home? What if house prices fall?

Un­der all Eq­uity Re­lease Coun­cilap­proved schemes, there is a ‘no neg­a­tive eq­uity guar­an­tee’, which means that your es­tate will never have to re­pay more than your prop­erty is worth, even if the to­tal amount of the loan, plus in­ter­est, ex­ceeds this amount.

Can I move to a new house with eq­uity re­lease?

In most cases you are able to trans­fer your eq­uity re­lease plan to a new home, as long as the provider is happy that the prop­erty you’re mov­ing to of­fers enough se­cu­rity for the lend­ing you re­quire. Ev­ery lender has its own terms and con­di­tions and th­ese re­quire­ments are all cov­ered dur­ing the ini­tial ‘fact find’ phase. If you wish to move into a new house in the fu­ture, this will be taken into con­sid­er­a­tion with the provider and prod­uct rec­om­mended.

What qual­i­ties should I look for in an ad­viser?

It is a manda­tory re­quire­ment of the Fi­nan­cial Con­duct Author­ity that you speak with a qual­i­fied ad­viser. Also, a bro­ker mem­ber of the Eq­uity Re­lease Coun­cil (like us) is rec­om­mended to en­sure peace of mind that the prod­ucts and ser­vices of­fered, con­form to the best prac­tices of the eq­uity re­lease sec­tor.

There are count­less eq­uity re­lease prod­ucts avail­able on the mar­ket to­day and a good ad­vi­sor can save you thou­sands of pounds in the long-run by rec­om­mend­ing the right prod­uct. It also helps to speak to some­one qual­i­fied in both mort­gages and eq­uity re­lease as there are oc­ca­sions when a tra­di­tional mort­gage could be more suited. We can look into all th­ese dif­fer­ent av­enues for you, to en­sure the best pos­si­ble out­come.

Scrupu­lous­ness and the abil­ity to lis­ten are also es­sen­tial qual­i­ties of an eq­uity re­lease ad­viser. This is a metic­u­lous process that of­ten re­quires sev­eral in-depth dis­cus­sions and we rec­om­mend to all clients that they dis­cuss their de­ci­sion with their fam­ily, who can also be present at any ap­point­ments.

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Laura Healy

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