Equity Release

Our Equity Release page will offer you a suite of useful content and materials that will help you remain updated with the newest trends in the equity release market.

Here, you will find helpful adviser guides, infographics, thought leadership articles, market insights from our renowned Equity Release team, informative webinars and video materials for your benefit. Read more...

What is Equity Release

Equity Release Mortgages: The Complete Guide

You’re short of cash and desperately in need of better financing to meet unplanned expenses, what’s the most comfortable and most beneficial thing you can do?

Let me tell you this...

At SovereignBoss, we are more than glad to expose the attractive benefits of an equity release and guide you in understanding why it’s ideal, and how it can effortlessly enable you to access the wealth that’s accumulated with the present value of your property. And you will not have to lose comfort by moving out.

One significant advantage of equity release is that it gives property owners the ability to enjoy tax-free cash that they can withdraw from the equity held in their homes.

How Does Equity Release Work?

For a better understanding, equity release is an efficient method that enables homeowners over the age of 55 to release or borrow some of their real estate’s equity to fund other necessities or fulfilments. Homeowners have the choice of picking whether to withdraw the loan as a cash lump sum or as a sizeable monthly flow of income. It’s all dependent upon your plan and your needs; you can even get a combination of both.

Equity release enables you to access tax-free finances to support your home upgrades or to sustain your income after you retire.

Types of Equity Release Schemes

It would help if you keep in mind these two options whenever you are pondering equity release:

What is Equity Release

A Lifetime Mortgage

Some people prefer to release the secured mortgage on their principal residential property and still maintain ownership. You too can close in some value from your property’s like an inheritance for your family by either repaying sizeable amounts or allowing the interest to turnover.

Keep these in mind as you look at a lifetime mortgage:

You can only qualify for a lifetime mortgage once you have reached or surpassed the minimum required age, which is 55 at the least. Life expectancy is a lot higher now, thus the earlier you take up a lifetime mortgage, the sooner it’s likely to become costly as time passes.

Look at this:

You must also know and fully understand the maximum percentage that’s available for you to borrow. By standard, you can borrow up to 60% of your property’s worth. Although, the ratio rises in correlation with your age when you take out the lifetime mortgage. Some providers might also make more generous sums of money available for people with particular medical afflictions or history.

In case you might be asking yourself...

You can legally stay in your principal residence until life requires you to shift into long-term care, provided that you meet all the terms and conditions that the equity release council standardises.

The advantage of being able to release equity cash in smaller frequent amounts is that you will also only have to pay interest on the amount you withdraw.

A Home Reversion

Another option for equity release is the ability to sell your home either as a whole or just a part of it, as a home reversion plan, and get regular sizeable payments or a one-off cash lump sum.

Important facts to note as you look at a home reversion plan:

Primarily, get a clear understanding of whether you can draw your equity release as a one-off cash lump sum, or in smaller sizeable payments. You should also be clear of the exact percentage that you will receive as income from the market. A rate that increases the older you get, but remains a variant between providers.

It's true...

Some providers for home reversion plans usually insist that you are at least between 60 and 65 years old before they consider your eligibility.

And the good news is:

As with a lifetime mortgage, you may also occupy your principal residential property for the rest of your life or up to the time you need to shift into long-term care. Still, provided you adhere to the conditions of your contract and the agreement concerning the level of maintenance you should expect to carry and the frequency of inspections for your property.

Equity Release Explained: Facts You Must Know

Equity release is an excellent option when you need to access some extra money but don’t want to move out of your house.

What is Equity Release

However, there are essential facts to consider:

Equity release proves to be more costly when you contrast it with a regular mortgage. After you release equity as a lifetime mortgage, your debt might explode when you allow the interest to get rolled up and pay interest at higher rates than a regular mortgage.

Now:

Your service provider must ensure to factor all the safeguards of your agreement as they make calculations and some up your service. For instance, they should assert your no negative equity guarantee and fixed interest rates throughout the equity release contract you’ll sign, and perhaps letting you borrow at varying interest rates in contrast to typical mortgage’s.

The interest rate for your lifetime mortgage will only get altered when you get more funds or top up on your borrowing, and that must only apply to the cycle concerning the extra funds borrowed.

More to that....

Equity release from your property may cause you to no-longer depend on your property as a source of funds you might require later during your retirement void. Perhaps if you decide you would like to downsize in the future, you might fall short of the required equity from your home to supplement that, which means you might need to repay the mortgage partially.

Consider this:

The funds you’ll get from your equity release might affect your entitlement to some state benefits as too. Also, you may risk having fewer funds to leave as an inheritance for your family if you release with an interest roll-up scheme.

What does this mean for you?

You must take on equity release plans with utmost precaution because they might get complicated to unravel if you reconsider. You might incur serious repayment fees if you have a change of preference, which is an unnecessary expense, although the charges become void when someone dies or moves into permanent care.

Seeking Renowned Advice

Now that you know what is equity release, it's time to find the best advisor.

If you’re considering drawing an equity release plan, take heart to seek renowned financial advice from an independent financial adviser that’s got specialist qualifications in providing recommendations and solutions on profitable equity release.

A renowned financial advisor will confidently help you exercise your ability to determine whether equity release is right for you. And you will receive knowledgeable recommendations on the best equity release plan to meet your requirements, utilising results from thorough professional research of the entire equity release market.

Your Ideal Equity Release Consultant

You must be sure that your adviser is in the registers as a member of the Financial Conduct Authority, by searching for the firm’s details. Every firm on the FCA register is under regulation. It must register with the Financial Ombudsman Service, which is a service provided for you to issue any complaints freely whenever you’re not satisfied with the services you get.

Be aware of this:

You should also ensure that your adviser is a registered member of the Equity Release Council’s directory for members. This registration certifies your insurance that they’ll comply with the trade body’s Terms and Conditions that supersede basic requirements.

Simply put...

For your sole advantage, make sure your service provider’s search encompasses the entire market as they seek the perfect equity release plan for you.

You must set the priority of asking your adviser what fees you will pay, the equity release services they offer, and any other costs you may incur, for instance; valuation, set-up, or legal fees.

How Does Equity Release Work

But How Does it Work Exactly?

Equity release is the service that’s made available to people that are over 55, which enables them as homeowners to access the capital accumulated in the value of their property.

So, here's the deal...

You can choose to receive the funds as instalments or withdraw it as a cash lump sum. Most equity release plans will enable you to gain access to this capital, including you releasing an equity loan and using your property as an establishment for the security of the loan, or you can sell some shares of the house if not the whole.

Primarily...

Your choices range between drawing a lifetime mortgage and selecting a home reversion plan. You will have various reasons for stimulating your decision to consider the options of getting an equity release. Perhaps you might need to make some renovations in your home, help your family with some finances, or even increase your income to enhance your financial status during retirement.

How Does Equity Release Work

First, ensure to understand how equity release works to use it to your advantage.

What is equity?

Equity is the total market value held in your home, less all outstanding mortgages or debts that you have secured using it.

Think about it...

The equity held in your home experiences increments as time passes, even as you make regular repayments and the value of your property increases. The total amount that you can release as equity differs regarding your age and some particular considerations, like health.

How Equity Release Works

For you to get any consideration when applying for an equity release plan, be at least 55 years and above, and you must be the sole owner of a property with a value that can be proportionate to the equity loan you desire.

What's next?

You can receive the equity release as one cash lump sum or in sizeable payments. You can spend the funds on how your needs. Although, you must first consider clearing any outstanding debts, using the equity release funds to clear these off. Then you can utilise the rest to get anything you need, for instance, to go on your dream holiday or merely to fund your home renovation projects.

And as if that’s not enough:

Remember, the equity you release is tax-free and yours to spend as you please. Some equity release plans provide you with the option to pay off the interest as monthly instalments; although there are still many options when that’s unnecessary.

In case you've been wondering...

A lifetime mortgage has emerged strongly as the most popular mode of equity release. It enables you the privilege of repaying your loan, along with interest, after the brokers sell your house. An action that usually takes place after you move into permanent residential care or are deceased.

How Long Does Getting an Equity Release Take?

It takes an average of 8-12 weeks from the time you apply until your equity release gets processed and completed for payment.

Keep track of the timeframe...

Getting yourself in the hands of a reputable equity broker to help manage your equity release. The broker will ensure that the process runs smoothly and you get your money released with little stress; in the quickest way possible.

The Process of Equity Release

The specific process that you’ll experience as you engage in equity release will vary depending on you as a client and the different brokers that you may choose.

Wonder how does the equity release process start?

Initially, you’ll meet with a professional equity release adviser or broker to discuss your eligibility.

Then, you’ll set an appointment for a follow-up meeting in which you will now debate on your ideas and thoughts regarding the advice you initially got. Afterwards, you can apply, your adviser will oversee that, and when everything gets approved, you will receive your finds.

Important Equity Release Schemes

There are two significant categories of equity release plans which you have to pick from when you want to access the equity valued in your home but not sell it.

A Lifetime Mortgage

A lifetime mortgage is a tax-free loan received as a predetermined amount that’s secured using your property as leverage. Most homeowners in the UK that are 55 and beyond are eligible to apply, and they have this as an available option.

Now, what does it mean for you?

You can keep complete ownership of your property minus them requiring you to make any monthly repayments when you release equity as a lifetime mortgage. The total amount of money together with interest accumulated is due for repayment after you you shift into permanent residential care, or you die. And your property gets sold, then the debt gets repaid, and any surplus money goes to your estate.

A Home Reversion Plan

When you release equity using a home reversion plan, they give you access to a tax-free lump sum or as continuous income flowing form you selling a portion of your home, if not all of it. A home reversion equity release is a service commonly available for property owners that are 65 and above.

Give it a thought...

Although, you consider that the amount you’ll receive as a payment from your broker will be below the market value of your home because you keep the right to continue occupying your home. You can remain accommodated in your house minus without paying rent until you move into permanent care or are deceased.

How Does Equity Release Work

When that time comes...

The property will get sold, and they will put the value of your share into your estate. This way, you can keep track of the exact percentage in the value of your home that’ll go to your beneficiaries as their inheritance after your passing.

Who Regulates Equity Release?

Every equity release plan, broker, and financial adviser is subject to the regulations defined by the Financial Conduct Authority (FCA). You note that all reputable equity release brokers are members of the Equity Release Council, and they must adhere to its standards.

What's more?

The ‘no negative equity guarantee’ stands as one of the most significant regulations, where you’ll not need to repay more interest than the value calculated on your home at the initial sale.

How Equity Release Affects State Benefits

It’s necessary to understand that equity release may have some effects on your entitlement and eligibility to maintain particular state benefits, whether you are currently utilising them or hope to receive some in the future.

It's true...

After releasing equity, you might find that the services you receive might reduce, or perhaps you might even lose access to them. Some benefits in question include: access to universal credit, Council tax-support, and Income support

The Best Equity Release Advice

Equity release is a significant financial commitment involving your property, and thus it’s not a decision that you must make without thorough examination. Your home is a valuable asset that may form a significant part of your estate and also provides you with inexhaustible shelter and security.

Now, a simple way is to:

You ensure that you get professional advice from reputable experts that will help you carefully consider every facet involved.

Want to know how much you can release?

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