Equity release
What is it and how can it help you?
Rates are some of the lowest on record
As homeowners continue to release money from their homes, the number of available equity release products has increased year-on-year. This means more choice for you. And, along with the product growth, interest rates have also dropped with some of the lowest rates on record currently available.
The actual rate that you can secure will depend on your individual circumstances, but a lower rate means a lower cost of borrowing.
Drawdown options let you take a regular income
The most popular type of equity release is called a lifetime mortgage, with this type of product you usually have the option to take the money all at once or to take it on a drawdown basis – as and when you need it.
There is also the option to top up your monthly income by using this drawdown facility to release money each month. This can help supplement your income, giving you an amount each month for a set period of time.
The advantage of this is that interest accrues only on what you have already taken, so you're not charged for the money that you don’t need right away.
Don’t forget that once you’ve repaid any standard mortgage, the money that you release can be spent as you wish. Not having the burden of monthly mortgage repayments will in turn free up more disposable income.
Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property. To understand the features and risks, ask for a personalised illustration.
Protect your inheritance
One of the concerns people may have when
considering equity release is how it will affect the inheritance they are able to leave behind when they pass on.
It’s true that equity release can eat into an inheritance, but you can also protect a portion of the equity in your property. This is known as an ‘inheritance protection guarantee’.
A specialist equity release broker, such as Age Partnership, will tell you everything you need to know about the effect on the amount of inheritance you can leave and if your entitlement to means-tested benefits could be affected now or in the future.
No negative equity guarantee
Most equity release plans now carry a no negative equity guarantee. This means that when your property is sold, and fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.
With most equity release plans there are no monthly repayments required. Any money released, plus accrued interest, is repaid upon death or moving into long-term care.
The right advice for your situation
Mail Finance work with the UK's largest equity release broker*, Age Partnership, who can provide you with a free, no-obligation quotation.
Only if you choose to proceed and your case completes would a typical fee of 2.25% of the amount released be payable (minimum £1,695).
It’s time to review your current equity release plan
With some interest rates sitting below 3 per cent, you may be able to save thousands of pounds in interest by reviewing your existing equity release plan.
Whether Age Partnership arranged your original plan or not, we may be able to get you a better deal by switching plans, or you could potentially release more tax-free cash.
Providing you’ve had your existing plan for more than 12 months, our specialist advisors will compare the whole market to make sure that your plan really still is the best option for you. The current low rates could mean that there may be a better plan out there for you which could save you thousands of pounds in interest over the course of the plan, when compared to your current deal.
Even if your current plan has early repayment charges, there could still be savings to be made because of the current low rates. It is worth taking advantage of the free plan review, as you’re under no obligation to go ahead with anything that is suggested to you.
The free plan review could also be the perfect opportunity for you to access more tax-free cash and you may also want take a look at some of the new plan features that may not have been available when you first took out equity release, such as:
The option to access your tax-free cash like an income rather than a lump sum; greater options for how and when you choose to make repayments; and the ability to access a cash reserve at a later date, so you’re not accumulating interest on money that you don’t need right now.
During your free review your advisor will let you know if switching plans is right for you, providing you with the full information, including discussing whether you qualify for the latest plan developments.
The amount outstanding on your equity release plan, including any interest that you have accrued and any potential early repayment charges, will also be talked through. They will also discuss what impact equity release could have on the amount of inheritance you can leave and how it could affect your entitlement to means-tested benefits, either now or in the future.