How equity release is helping homeowners in 2020

Equity release has proved itself in the most turbulent of times to emerge as a valuable, mainstream retirement funding solution for the over 55s, that looks like it’s here to stay.

A huge £963m of property wealth was unlocked by UK homeowners between July and September this year, according to the Equity Release Council’s latest figures.

And, interest rates are currently some of the lowest we’ve seen, helping homeowners to save hundreds, or even thousands of pounds in interest compared to if they had taken out a plan in previous years.

So if you’re thinking about how your property could be working harder for you and help provide a comfortable retirement - without having to leave the home you love – what should you do next?

Step 1: How much?

The idea of freeing up money for other dreams and goals is an exciting one, but this is a big decision that may need discussing with family. Equity release is not the best solution for everyone and it’s important to have a clear idea of what you’d like to do with the money.

The only caveat of releasing money is that you must repay any outstanding mortgages that you have, which is the most popular reason people released money over the past year. Many people also release equity from their home to help family, provide a deposit for a new house and even increase the value of their own property with home improvements.

The smallest amount available for equity release is £10,000 and the most you can release is 55 per cent of the property’s value, depending on the value of the home and the age of the youngest homeowner.

Step 2: Speak to an expert

A qualified equity release advisor will be able to help you pick the right type of plan for your circumstances and needs. And they should only recommend that you go ahead with equity release after first exploring all of your other options for accessing the cash that you need.

The most popular type of equity release is a lifetime mortgage, which is secured against your property.

With a lifetime mortgage you can choose to access tax-free cash with no monthly repayments. The money that you release, plus accrued interest, is only repaid upon death or moving into longterm care.

While some advisors are tied to particular lenders and have a limited product range others, Mail Finance works with Age Partnership, who have access to plans from the whole market so they can explore all your options to find the best one for your circumstances, based on the availability of specific plans and rates.

Step 3: Request your free personal quotation

Equity release is a big step, so the next step is to find out exactly what your needs are and how this kind of borrowing will affect your future.

Your advisor will provide you with a personalised illustration which outlines the features and risks involved.

It’s their job to be sure that you’re fully informed about all aspects of equity release, including the effect it will have on the amount of inheritance you can leave your family and if your entitlement to means-tested benefits could be affected, either now or in the future.

Age Partnership will provide you with a quotation free of charge and without any obligation for you to proceed. Only if you then choose to proceed and your case completes would a typical fee of 2.25 per cent of the amount released be payable (minimum £1,695).

Step 4: Make the right choice for you

Your advisor will help you understand all of your options so you can decide what the right solution is for you. If you decide equity release is right for you, your advisor can help secure the right plan, giving you peace of mind and help make your future more comfortable.

You can also rest assured that your plan stays right for you. After 12 months, Age Partnership can review your equity release plan by comparing the whole of the market to ensure that it’s still the best option. And, if a better plan for you becomes available they can help you switch, which could save you thousands of pounds in interest over the course of the plan compared to your original plan.