There are many reasons why someone may want to Release Equity from their property under a Lifetime Mortgage more commonly known as Equity Release.
Equity Release Mortgages work by lending you money that is based on your age at outset of the mortgage, charging interest only on the loan amount, without ever needing to make a repayment to the lender.
This would allow you to borrow money for instance to pay off an existing mortgage that has become unaffordable either on a monthly basis or because the original term has ended and there is still a balance outstanding, or to improve your home and make it maintenance free in retirement, or even to buy large ticket items like motorhomes or cars which you cannot service through your savings or income.
It can even be used to move and buy another house.
The process begins with an appointment with a fully qualified Equity Release Specialist, who will go through a stringent financial process to ensure Equity Release is the right product for you.
They will also be expected to make clear to you that is it likely to affect any inheritance you may want to leave to family as the monthly repayments are added to the loan outstanding and is due on death of surviving partner (if a couple) or permanent residence in a care home.
Once this has been explained and agreed on the amount to borrow which is based on age and broadly speaking is 25-50% of the value of the property.
An Independent Adviser will then search the market for the best rate for your circumstances, because once the rate is set and agreed it will never change for the life of the mortgage. An application will be made to the lender, your property will be valued and as a result an offer will be sent.
Once the offer is sent and accepted your solicitor will process the mortgage with the lender and you will receive the money.
In cases where you may not want all the money at once you can agree a higher amount, which will be available without another application in the future and just drawdown the amount you require today. You will only pay interest on the amount drawn and not the whole agreed loan until you have drawdown the whole amount. Due to the potential of a reduced inheritance we always recommend talking to your family about considering Equity Release.
You can contact one of our independent advisers for personalised advice and support in making confident, informed decisions by using our Facebook or Contact Us pages, or speaking to a colleague in our office on 01329 282882.
This is a lifetime mortgage (home reversion scheme). To understand the features and risks, ask for a personalised illustration.
Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.