Equity release. What is it?
Equity release is where you can release money from your property without having to move home or sell your house. You need to be aged 55 or over.
There are no monthly repayments and the interest rolls up and is payable when the property is sold. We only recommend plans that offer a “no negative equity guarantee” which means that you or your family will never owe more than the value of your property.
You can access the funds as a one-off lump sum, occasional withdrawals or regular payments depending on the plan you chose. Remember, the money released is tax-free and you can spend it however you like as long as it’s legal!
Equity release can be used to repay existing loans and mortgages, you can gift it to help your family or just to make your day to day living more enjoyable. The choice is yours.
Here are some examples of how people have used equity release
Clear debts
If you are struggling to repay that mortgage, loans and credit card debts, then equity release may be the answer and help you take back control of your finances. By paying off these monthly commitments it will help you to make your living cost more manageable. Enabling you to enjoy your retirement without financial worry.
Making life better
Do you want to travel while you still can? Perhaps you what to visit family overseas? What about a more reliable car?
It’s nice to know that you have money available to you. Equity release could make your retirement far more enjoyable.
Help the family
Help your family when they need it is one of the most rewarding things you can do.
By gifting money now could help someone, get onto the property ladder, pay for university fees or just get out of that financial mess their in. They use the money now and you see them enjoy your gift.
Enjoy your home
You may want to update your home.
Equity release can provide you with that lump sum you need for that wet room or stairlift. You could save money by making your house more energy-efficient. All this and without the need to move away from your friends and memories.
Equity release. How does it work?
There are two types of equity release. Home Reversion schemes or Lifetime mortgages. With a Home Reversion Plan, you sell all or part of your home for a tax-free cash lump sum. You will have the right to stay in the property until you pass away. However, most people who look at equity release choose a Lifetime mortgage.
- With a Lifetime Mortgage, you get
- The loan is secured against your home, while you still retain ownership.
- You can choose to protect some of the value of your property as an inheritance for your family.
- No need for monthly repayments. The interest is rolled-up into the loan known as compound interest.
- The loan is repaid when you (and any other applicant) either pass away or move into long-term care.
- When your property is sold when you pass away or move into long-term care the Lifetime mortgage provider will take their money from the sale proceeds. The remainder then goes to your estate.
How much cash can I release?
The amount you can borrow is determined on the value of your property, your age and your health and lifestyle. Unlike a traditional mortgage, your income will not be assessed as you have no monthly repayments to make. As a rule, the older you are and the more your house is worth the more tax-free cash you will be able to release.
Go to our Equity Release Calculator to find out how much tax-free money you can release.
Which Lifetime mortgage is best for me?
We are an independent equity release specialist. This means we will recommend the best equity release solution for you. We will look at all the options available from the whole of the market.
We will take time to understand what is important to you and what you are trying to achieve. Only then will we make our recommendation of the most suitable plan for you.
We are a member of The Equity Release Council. This means that we recommend approved plans that come with a no negative equity guarantee. We feel that this is important as it ensures that you can never owe more than the value of your property. This guarantees that you will not be leaving your loved ones with unexpected debt.
Important to some are Lifetime mortgage plans that allow you to protect a percentage of your home’s future value. This will enable you to guarantee an inheritance for your family.
These are just a few of the options available to you. You adviser will help you understand which options are most suited to you.
Get the family involved
If appropriate we feel that it is important to involve your family in any financial decision which will reduce the value of the inheritance being left to them. You can invite your family and friends to any of the meetings, the choice is yours.
We find that most families are supportive of your decision to take an equity release to help you in retirement. Attending the meetings will also help them understand who the plans work.
The key stages to an application
Finding out about you
We will always look to meet you on a face to face bases. After understanding your financial situation and what you are looking to achieve, we will research the market and compare different providers. We will then make our recommendation by way of a written personal illustration. Then we will talk you through our recommendation to ensure that we have met your requirements.
The application forms
We will help you to complete the application form accurately as any mistakes may affect your eligibility and can be time-consuming to correct later. At this stage, you may be required to pay for a valuation of your property. However, most clients make us of the “free valuation” option offered by the lender. This fee is not refundable even if the plan does not go ahead.
The Valuation
The equity release lender will instruct a surveyor to visit your property and value it. The surveyor will agree with you a suitable time to visit the property
The Offer
When your property has been valued, the lender will finalise the prosed terms of your plan in an offer. If you decide to take the offer up, you will appoint your independent solicitor to act for you through the conveyancing process.
Conveyancing
This is arranged between your solicitor and the equity release lender. A legal charge will be taken over your property. Checks are made to ensure that the property is suitable security for the equity release lender.
Completion
Once the legal documents are ready, your solicitor will arrange completion of the loan. You will be required to sign the legal charge. Your solicitor will make sure that you are entirely comfortable with the terms of the plan. Once you have signed the legal documents you will no longer have the right to withdraw.
Shortly afterwards the equity release lender will release your cash lump sum to your solicitor. Your solicitor will pass this money to you.
Common concerns
Our expert equity release advisers are always happy to explain how Lifetime mortgages work and answer any of your questions. Equity release is regulated by the Financial Conduct Authority (FCA), this means there are several guarantees in place to protect you and your finances.
Here are the most common questions that we are asked about equity release plans:
Q: “What will the monthly payments be?”
A: With most plans, there are no monthly repayments to make. This is because the loan, plus interest is rolled up (compounded) into the loan. The loan plus the interest is repaid when the plan comes to an end. This may be when you (and any other applicant) either pass away or move into long-term care. The total amount owed will usually be paid from the sale of your property. An exception to this is if you take a Lifetime mortgage with the option to make interest payments.
Q: “Can a Lifetime mortgage be used to pay off my existing mortgage?”
A: Yes. The money released from your Lifetime mortgage will first be used to repay your existing mortgage. The difference is then yours to spend. Remember that this is a tax-free lump sum.
Q: “Can I lose my home?”
A: You will not lose your home when you choose a Lifetime mortgage. As members of The Equity Release Council, we only recommend plans that give you the right to remain in your home for as long as it remains your main residence. Additionally, we only recommend plans with a “No Negative Equity” guarantee. This means that you will never owe more than the value of your home.
Q: “Can I move to a new house after taking out a Lifetime mortgage?”
A: Yes. With a Lifetime Mortgage, you can move to a new home. Normally, you will be offered two choices. Repay the outstanding amount owed plus any early repayment charges. Or, you transfer your Lifetime mortgage to another suitable property without any financial penalty. Each provider has its criteria, so you should check this out before taking out your plan.
Q: “Will my estate be affected by equity release?”
A: When you pass away or move into long-term care, your property is sold and the money is used to repay your equity release plan. This will reduce the value of your estate.
Any equity taken out of your property will reduce the amount of inheritance you can leave your beneficiaries. You can request Inheritance Protection which allows you to leave a fixed percentage of your home’s value to your beneficiaries.
You will never owe more than the value of your home and any money left over is returned to your estate.
Q: “How is equity release regulated?”
A: Equity release is fully regulated by the Financial Conduct Authority (FCA). As a company, we are also authorised and regulated by the FCA. Our registration number is: 577360
To take out an equity release plan, you must take specialist advice.
As members of The Equity Release Council, we adhere to their standards.
Q: “Can I repay my Lifetime mortgage early?”
A: Lifetime mortgages are a long-term financial commitment. You will have the option to replay your Lifetime mortgage, but you may incur an early repayment charge. Some plans will allow you the option to repay the mortgage early and choose fixed early redemption penalties over a certain time frame.
Interest payment plans enable you to make monthly repayments on the loan, or you have the option on some plans to make voluntary partial repayments. This is usually up to 10% of the capital.
Please speak to your equity release adviser before going ahead, if this is something that you are interested in as these features are not common with all plans.
Points to think about
Points to think about
Your Anstee & Co equity release adviser will talk though all the above points with you.
For your peace of mind
We are registered with or are members of the following professional bodies, giving you added peace of mind.
These products are lifetime mortgages or home reversion plans. Equity released from your home will be secured against it.