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Equity Release Plans Worcestershire

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Jane Price from EQUITY ADVICE LLP in Worcestershire

answers your questions on 

EQUITY RELEASE PLANS.

 

What are the basic criteria to be able to take one of these plans?

You have to be a homeowner, the youngest owner being aged over 55, with little or no mortgage on the property. Some unusually built properties are unacceptable to some lenders.

 

How much will I receive from one of these plans?

This varies from person to person. The calculation that the lenders use is based on the age of the youngest owner and the value of the property, for instance a 65 year old may be able to raise £60,000 if their property is valued at £200,000.

 

There are a lot of people who tell me that you can lose your home if you take one of these plans, is this right?

No-If you take an FSA regulated plan, backed by the SHIP code, these plans all have guarantees attached to them, which mean that you can remain in your home until you die or go in to long term care and the plans can never roll up to more than the value of the property. See a qualified independent adviser to go over all aspects of these plans and look into your circumstances carefully. All of these plans have to be signed off by a solicitor to ensure that they have been done properly.

 

I don't understand the difference between Lifetime Mortgages and Home Reversion plans, can you explain?

There are two different ways to take Equity Release-

Lifetime Mortgages can be taken without income proof or credit scoring. These have interest to be paid on them, you can either pay the interest off if you have enough income or you can have the interest added to the original amount borrowed, this is called roll-up. The plan then has to be repaid from the sale of you house when the last owner dies or goes into care. If you roll-up the interest, this compounds interest.

Home Reversion Plans. Are when you sell all or part of your home to a company that will guarantee that you stay in your home, rent free for the rest of your lives. You will not receive market value for the property as you have the rent free, lifetime occupancy guarantee attached.

 

How do I pay for these plans?

If your income in retirement is good, there are interest only options that we can look at and then you pay a monthly interest. If your income is not so good, then the interest can be added to the loan and then when the last applicant dies or goes in to long term care, the house has to be sold within 12 months and the loan plus the accrued interest is repaid from the sale proceeds.

 

What do people use this money for?

Basically anything they like, as they can receive a lump sum or a smaller lump sum with a reserve facility, to draw more money in the future, if they want to.

Many people use this for supplementing poor retirement income, some gift money to their families for debts or house deposits, some repay their own debts or mortgages and it can also be used to pay out a partner in a divorce settlement, some people even use it to for inheritance tax planning or simply for holidays, cars etc. which they may not have savings for.

If you would like more information or advice on Equity Release then click here to contact Equity Advice LLP

 

 


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