Equity Release Mortgages – Everything you need to know

At different stages of life we require money for different things. Particularly as you near retirement, it’s common to find yourself looking for capital to invest in other things than property, whether these are related to your own life and enjoyment, or to helping friends of family. If you are fortunate enough to own your home, it may also mean that you are in the difficult situation of having no spare capital because it is all tied up in your property – in this scenario, an equity release mortgage can make some of this capital available to you.

What is an equity release mortgage?

An equity release mortgage makes funds tied up in your property available to you, without the requirement to sell your home, or move to a new property. There are different types of equity release scheme available, but they generally fall into one of two types:

Lifetime Mortgage:

You receive a tax-free lump sum secured against your property. Interest accumulates but there is usually no monthly repayment to be made. Instead, the loan plus the accumulated interest is repayable on the sale of your property, after your death.

Home Reversion Plan:

You receive a tax-free lump sum in exchange for the sale of a part of your property. No monthly repayments are made and there is a guaranteed lifetime lease. The percentage the lender has invested is paid back to them after your death, once your property is sold.

Do I qualify for an equity release mortgage?

Not everyone qualifies for an equity release mortgage and the first factor to consider is always your age – put simply, you must be between the ages of 55-95 to be considered. Beyond this, you need to be a UK homeowner with enough capital invested in your current property for your requirements. It does not matter what you plan to use this money for and you can spend it as you wish. You may help friends of family to secure their own mortgage or you may simply wish to go on the holiday of a lifetime. We’re only here once, and we would advise all of our clients to truly consider what would make them happy. As lifestyle financial planners it is our mission to identify this, but furthermore, to help action plans to make these dreams a possibility.

Are there any factors to be aware of with an equity release mortgage?

There are many and they are varied. An equity release scheme can be a fantastic way to generate money without the hassle or expense of moving from your home, but there are factors to consider too. Do you live with someone else, or share your property jointly, for example? What will the inheritance tax implications be on your children if you were to die? What happens if your situation changes and you decide to repay the loan early? We can advise you on what to do in all of these circumstances, as well as a whole host of other that may apply to you. As with all types of mortgage, it is always a good idea to receive advice before entering into them.

We offer equity release mortgage advice for clients across West Sussex, Surrey and beyond. Our in-house, West Sussex based mortgage adviser is happy to discuss whether an equity release mortgage is a good option for you and, if so, how to proceed with your application.

Would you like to arrange an appointment with our Sussex-based in-house mortgage adviser?