If you are 55 or over, it’s likely that some of your capital will be tied up in property. Equity release refers to products that allow you to access amounts of cash that are otherwise held in property ownership, either in a lump sum or smaller amounts. We offer advice on a comprehensive range of equity release products from across the market, to provide you with a variety of options that will meet your circumstances.
Lifetime mortgages
A lifetime mortgage allows you to borrow money that is secured on your home to give you a lump sum and/or a regular income. This method also allows you to retain full ownership of your property, so you are still able to make home improvements providing you keep it in good condition.
You will be charged interest on the amount you have borrowed, which is usually paid back from the proceeds of the sale of your home after death. Any money left over after repayment is then paid to your beneficiaries.
Home reversion plans
A home reversion plan is where you sell all or part of your home at an amount lower than market value, in exchange for a lump sum or a regular income that is free of income tax. This also allows you to stay in your property without paying rent and effectively become a tenant.
However, this means that you would require the product provider’s consent before making any changes to the property.
Costs and considerations
At McMillan Financial Advice, we can advise you on the considerations around equity release products, such as mortgage arrangement and legal fees, as well as the potential impact on the inheritance you leave to your beneficiaries.
Please contact us if you would like to discuss your personal situation and requirements.
To understand the features and risks associated with a Lifetime Mortgage or Home Reversion Plan, please ask for a personalised illustration.
Equity Release including Home Reversion Plans and Lifetime Mortgages will reduce the value of your estate and can affect your eligibility for means-tested benefits.
Equity release can be more expensive than a traditional mortgage.
There is no “fixed term” by which you need to repay a Lifetime Mortgage loan, therefore accrued interest may escalate quickly.
Home reversion plans are likely to offer you much less than the market value of your property.
Releasing equity in your property now may leave you short of funds at a later date.
If you move home, you may need to repay some of your mortgage, particularly if you are intending to downsize.
Monies received through Equity Release may affect your state benefit entitlement.
