Equity Release
Difficult financial times have been brought to many of us by the economic downturn, leaving many retirees in need of an additional financial boost. Many have thousands of pounds tied up in their home which, for most, is worth far more than they paid for it.
Equity release is a means of safely releasing a tax-free lump sum from the thousands of pounds currently locked in your home; boosting your retirement income and enabling you to live life to the full!
The money can be used for a host of reasons, from helping with the everyday costs of living, gifting to family, making home improvements or even for going travelling and seeing the world!
To qualify for equity release the following criteria usually apply:
- All applicants must be aged 55 or over.
- You must own a property worth at least £50,000.
- You must live in the UK (including Northern Ireland).
- You must be able to release enough equity from your property to enable you to fully pay off any outstanding mortgage.
- Your property must be either freehold or leasehold, with a minimum lease period of 75 years remaining.
- Your property must be of standard construction and in good condition.
Is equity release safe?
The sale of equity release is fully regulated by the Financial Conduct Authority (FCA), ensuring all advisers follow strict rules and guidelines with the FCA keeping a record of all approved firms.
You should only consider plans which come with the guarantee that you will never owe more than the value of your house, can stay in your home for life and can move house if you wish.
Are all loans for the over-55s the same as equity release?
You may have seen schemes which sound as though they are equity release, but are actually nothing of the sort. These “sale and rent back” or “sale and lease back” schemes are targeted at homeowners in financial trouble and offer a cash lump sum for the sale of your home, but you then have to pay rent to continue to live there.
Equity release is regulated by a completely different set of rules and regulations and should not be confused with this type of arrangement.
Making the right decision
Equity release is a huge financial decision and one which requires independent financial advice to ensure it’s the right option for you. A good specialist equity release adviser should always discuss all other options with you, ensuring you have a full understanding of all alternatives as well as equity release.
You should choose an adviser which is independent meaning that they are not tied to a specific brand, provider, offer or promotion. They can then search the entire market to find the best plan to suit your individual circumstances and tailor their advice accordingly.
You must be logged in to post a comment.