Equity release is a way to release money by way of a loan secured on your home or through the sale of all or part of your home, subject to certain rights to remain in occupation.
This process gives you the option to take a variable cash sum which you might then reinvest to provide an income or use to pay for that luxury holiday, home improvements or alterations, or perhaps to provide additional retirement income.
The most popular scheme is known as a Lifetime Mortgage. In this case, interest charged by the mortgage lender can either be paid monthly or accumulated and added to the original equity you have released, the sum of which is only paid once your home is sold. You have the comfort of knowing that you can stay in your home until you either die or move into a long term care home.
You can usually raise any sum from as little as £10,000, although there is a general requirement that you are over 55 years of age and have equity in your home of £150,000 or more. Most mortgage lenders offer more the older you are.
This is largely dependent on the perceived likelihood of price corrections in certain areas which might make equity release loans more ‘risky’ to lenders. A home valued at £500,000 might, therefore, enable a homeowner to raise as much as £175,000 through equity release.
Most lifetime mortgages now come with a “no negative equity guarantee”, which means that you will never owe more than the value of your home. Furthermore, whilst your children will not ‘inherit your debt’, your estate will be liable to repay the lifetime mortgage (and accrued interest) upon your death. Therefore, your estate will be reduced.
Related articles:
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.
Are you looking to purchase your first home but unsure where to begin? Here are some tips to get you started.
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
17 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
18 days ago
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
The UK government is introducing new rules for Energy Performance Certificates (EPCs) that will impact landlords. Here's a summary of the key changes
25 days ago
Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.
28 days ago
Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.