Equity release is available to homeowners who are aged 55 or over, and could benefit from either a cash lump sum or additional income. A suitable plan can provide a solution if you want to retire but need more income, or aspire to a retirement which would overstretch your current income.
There are two types:
• Lifetime mortgage: Lifetime mortgages are secured against your home, over which you retain ownership. Most lifetime mortgages do not require you to make payments. Instead, interest is rolled up and added to the balance of the mortgage.
• Home reversion: With home reversion plans, you sell all or part of your home to the provider in return for a lump sum or regular payments. You do not have to pay rent to the provider.
Both plans guarantee lifetime occupancy. In other words, you will be entitled to live in your home until you die or move to long-term care, when the property will be sold and the plan paid off.
Things to consider
It is important that you understand how equity release works and are comfortable with the potential risks.
• The amount raised through equity release will not reflect the full property value.
• You don't have to pay tax on equity released, but it may affect your entitlement to means-tested benefits.
• Releasing equity will erode some or all of the equity in your home which could affect the inheritance you are able to leave.
How we can support you
We offer free, no obligation consultations in the comfort of your home. We will discuss your needs and circumstances to establish if equity release is appropriate for you.
We are happy to talk it through with you in whatever way makes you most comfortable, including having someone close to you there for support.
Our commitment to you
It is really important to us that you feel comfortable and in control when dealing with your finances.
All of our product recommendations are underpinned by our core value of ethical advice. We will only advise you to take out a product where you have a clear need for it, and we will be upfront about the associated cost and risks.
Some Frequently Asked Questions
We love questions. Our most common queries are answered here. Get in touch with us and we will help answer anything else you need to know.
How much can I borrow?
The amount you can borrow depends on your income and expenditure. We can review this to get an Agreement in Principle from your mortgage provider to show the maximum they will lend to you. It will also show what percentage of the purchase price you will need to put down as a deposit, based on a soft credit search.
What costs are involved with buying a house?
Buying a house is expensive and often comes with fees you don’t expect – that is why we don’t charge any.
You will need to set aside money for:
• Solicitor fees – up to around £1500
• Stamp duty for properties valued at £125,000 or more, though you may not have to pay anything if you are a first-time buyer.
• Removal firm fees – around £500
• Valuation/Survey fees – Mortgage providers will insist on a basic valuation survey and the cost will depend on how much the property is worth. You may also want to get additional surveys which will have their own fees.
• Mortgages sometimes have an arrangement fee, usually to secure a lower interest rate than a fee-free product – we will check for the deal which will save you the most overall and recommend the most suitable mortgage for you.
• You may want to set aside money to renovate/decorate your home when you move in.
I have poor credit. Can I get a mortgage?
Yes. A low credit rating does not necessarily rule out a mortgage as an option for you. Sometimes lenders will ask you to have a larger deposit if your credit rating is on the lower side, which we can find out for you at the first stage when getting your Agreement in Principle. Every lender’s criteria is different, and we will search the whole of the market to find a solution to meet your needs.
I am on a fixed-term contract/on maternity leave/recently employed in a new job. Can I get a mortgage?
Yes. Lenders have different criteria and will require documentation from you to verify your income and they sometimes contact your employer for more information. We will liaise with your lender to provide everything they need.
I am self-employed. Can I get a mortgage?
Yes. Most lenders will provide mortgages based on self-employed income if you have been trading for at least three years and you have two years of accounts or self-assessment tax returns (SA302’s). If you haven’t been trading long enough, don’t panic. You may still be considered for a mortgage with some lenders with as little as one year of accounts, particularly if you have worked as a contractor in the same industry or have evidence of work lined up in the future. A larger deposit and good credit history will help too.
I have a fixed rate mortgage. Will my payments go up when the deal comes to an end?
When your fixed deal finishes, you will have two options:
• If you choose not to apply for something different, your mortgage will automatically move to a different rate as set out in your original mortgage offer. This is usually the lender’s standard variable rate, which may be more expensive than your fixed deal.
• You have the option to renew onto a new deal, either with your existing lender or elsewhere.
If we arrange a fixed deal for you, we will get in touch when it is getting close to the end date to find the most suitable product for you moving forward.
What insurance do I need?
Insurance policies fall into three main categories:
• Life assurance products which protect you in the event of death.
• Products for income protection and products which protect you in the event that you become seriously ill or disabled.
• Other insurances which protect you against other events, like home insurance, car insurance or private medical cover.
Mortgage providers will ask that you have buildings cover in place, and we can review your needs in other areas to ensure you are sufficiently covered.
Is equity release right for me?
With underfunded pension schemes and increasing pressure on the government to provide the state pension to a population which is living longer, many people are finding themselves without enough money to have the retirement they have aspired to. If this sounds familiar, equity release may be a suitable option for you, helping to supplement your existing retirement provisions without leaving your home.
Equity release come in various forms, so whether you need to create an income to make ends meet or want to release a lump sum to improve your home or fund a once-in-a-lifetime holiday, we will search the market to find the most suitable plan for you.
Taking equity release is a major decision and it does come with risks. We offer experienced, specialised advice and will walk you through every step of the process. We will meet you for a consultation in the comfort of your home and we are happy to involve your family or someone you trust to support the conversation if this will make you feel more comfortable.
I am considering equity release, but I am worried about giving away ownership of my property. Is there any way around this?
Yes, there are some options which can help you retain ownership of your home. This is a common concern with equity release, so we will help you understand and ensure you are comfortable with the risks before going ahead.
Lifetime mortgages allow you to keep 100% ownership of your home and usually do not require you to make payments. Instead, interest is ‘rolled up’ and added to the mortgage balance, which is secured against your home and paid back either on death or when you move to another home or into long-term care. There may be still be some equity in the property which will remain part of your estate and can be passed on as an inheritance, though with lifetime mortgages there is the risk that
the equity could be fully eroded with the addition of interest, particularly if you are a younger borrower. Many providers offer a ‘no negative equity guarantee’ to ensure that there will be never be anything extra to pay over and above the sale price of your property.
Home reversion plans are another alternative, through which you sell all or part of your property to the provider in exchange for a lump sum or an income. This means that when you die or move to long term care, the property will be sold and the provider is entitled only to the percentage of the sale price that they bought; the rest is still yours and will remain part of your estate.
What fees do you charge?
We do not charge any upfront fees to our clients, regardless of the complexity of their situation. Our consultations are free and come with no obligations to sign up for anything.
When we arrange a mortgage, we receive a small percentage of the mortgage balance as a procuration fee from the lender. With insurance products, providers pay us a commission.
We feel that our relationship with you as our client should be based on trust, respect and mutual benefit, and we want you to feel that you are in safe hands with our advice. Our ethos is to be completely honest and upfront with you and to be perfectly clear that we recommend products because they are right for you, not because the remuneration is right for us.