What is Equity Release?
Equity release is a way of freeing up capital tied up in your property without having to move home. Equity release product allow you to either borrow against the value of your home or sell all/part of it for a regular monthly income, a lump sum, or the facility to get at equity as and when you like.
Am I eligible for Equity Release?
All applicants over 55 years old.
A home owner.
What are the next steps?
Capital raising from existing home – how much is your home worth? Do some research into how much your home is currently worth on the open market.
If you plan to purchase a new home, speak to one of our team who can discuss how much you can borrow before putting in an offer with an estate agent.
Will releasing capital from my home affect my state benefits?
Yes it can have an impact on your state benefits, speak to one of our team who can look into this for you. NB: We are not experts in State Benefits entitlement and would recommend that you research your entitlements before proceeding with any Equity Release plan.
Can the money that I release from my home affect my tax position?
Any equity you release from your home is tax-free. Despite this, if you choose to invest the funds that you release, any interest you receive may be taxable and may affect your tax position.
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Speak to your family
It is essential that you speak to your family about your thoughts towards and interest in equity release and the decision that you have made to proceed if necessary. Equity release could impact the inheritance that you wish to leave to them. NB: Entering an equity release plan is your decision and you should not be pressurized by others by your family to make a decision. When you speak to our team, one of the questions that will be asked is whether you have already consulted with your family and how long you have thinking about equity release.
I already have a mortgage on my home. Do I have to pay it off first?
No, but you will need to pay off the existing mortgage with either funds from the equity release plan or from other funds before the equity release mortgage commences.
Two options for Equity Release
OPTION 1: LIFETIME MORTGAGE
OPTION 2: HOME REVERSION PLAN
Is equity release always a long term plan?
Generally yes however there are more flexible products available to allow you to make overpayments to reduce the amount that you owe without paying penalties to the lender and are designed to fit varying needs. We treat every Equity release on an individual case by case basis as we like to think of our clients as being individuals.
What are the alternatives to Equity Release?
Before taking out an equity release plan, it is essential that you review the other options available to you. These could be a standard residential mortgage, other investments, savings or assets that you can draw funds out of, or income from either employment or self-employment.
Alternatively if you could downsize from your existing residence or moving to another area where housing is cheaper. The other options could be get a lodger to live with you or taking out a loan from family or friends. When you speak to our team, one of the questions that will be asked is whether you have any alternatives open to you before continuing with the equity release application process.
What is a no negative equity guarantee?
The Equity Release Council approved products offer a no negative equity guarantee and part of their code of conduct for equity release providers.
This means that when you die or move into long-term care, your home will be sold and the money will be used to pay off the equity release loan. Any surplus will go to your beneficiaries.
In the unlikely event that the value of your home has lowered significantly it would be possible that the value of your home no longer covers the value of the equity release loan, meaning that there would be shortfall.
For the Equity Release Council approved products with a ‘no negative equity guarantee’ would mean that the shortfall would be written off, confirming that your beneficiaries would not have to pay the cost of the shortfall whatever the future holds.
What are the costs involved in setting up an equity release scheme?
Costs can vary from provider to provider, here is a list of the general costs:
- An arrangement fee to cover the provider’s costs for setting up the scheme for you
- A valuation fee to pay at time of application to be paid to the provider
- Legal fees to pay to your Solicitor (we can also provide you with a quotation for a Solicitor who is on the provider’s panel and has experience with equity release)
- Buildings insurance as it is a condition of the loan (like any mortgage) that the appropriate level of cover for your home is in place at the time of application and is payable to your insurer
- We charge a fee of £895 for arranging and administration connected to arranging equity release for you, this is payable to us on completion. For a further advance on an existing equity release scheme, we charge a fee of £295 for arranging and administration costs.
We will notify you of all the fees, plus this will also be made clear on the Key Facts Illustration that your adviser gives to you before you sign any paperwork.
How will Equity Release benefit me?
For many home owners, owning a property means that you may have a significant sum tied up in your home, but at the same time, you may find you just don’t have enough income to enjoy the sort of retirement you had planned. Equity release can provide disposable income to allow you to enjoy a more comfortable retirement and maybe even fulfil some of your long-held dreams or ambitions.
Key points about Equity Release:
- You need to be over 55 and own your own home.
- You can get a cash lump sum, with or without a drawdown facility to use as you wish.
- Continue to live in your own home.
- Continue to be responsible for maintaining your home.
Popular reasons for Equity Release:
- Improving or maintaining your lifestyle.
- Clearing your mortgage.
- Financial help for a family member.
- Moving to a large property or a more expensive area.
- Home or garden improvements.
- Buying a new car.
- Paying off debts.
- For regular holidays and short breaks.
- Avoiding inheritance tax.
- Financial security and peace of mind.
We provide a fast and friendly hassle free service. We are located centrally in Cambridge with customer parking. Home visits are also possible in Cambridge and the surrounding villages. If you live further afield it’s worth noting that everything can be conducted over the phone. Why not call us now to discuss your requirements and request a quotation, or let us call you by requesting a call back.
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Think carefully before securing other debts against your home. Your home may be repossesed if you do not keep up repayments on your mortgage.
A fee of £750 is charged for our services, payable upon completion of your mortgage. We will also be paid commission from the provider.
Alternatively, there is a fee only option of 3% of the total facility, payable on completion.