Many grandparents and parents maybe considering Equity Release from their properties, to help fund school fees for grandchildren or helping towards a deposit for their children’s first once we are out of this lock down.
Many people considering Equity Release are put off or worried about certain aspects. I hope here to answer some of those concerns and help give you the confidence to consider the option.
Some common misconceptions…
Worried about the possibility of falling into negative equity?
Answer:- many lenders in the Equity Release market uphold the no negative equity release guarantee outlined by the Equity Release Council. This means that provided the property is sold for the best price reasonably obtained, you will never owe more than the value of your home and no debt will be passed onto your estate.
This is still true if your home is sold for less than the amount owed when you die or move into long term care as defined in the lender’s terms and conditions.
I wish to leave an Inheritance and with Equity Release I can’t
Answer:- Although it will reduce the inheritance you may wish to leave behind, many lenders today offer an Inheritance Guarantee. This allows you to select the amount you wish to leave at the start of the plan. This percentage is deducted from the from the sale value of the home when you pass away or move into long term care, as defined by the lender’s terms and conditions.
Aside from this you can used the money tied up in your home to share with your family now so they can share the enjoyment of its use. Such as paying for school fee’s or help with deposit.
It seems really complicated
Answer:- We here at Temple Wealth Ltd and many providers produce useful guides to help you understand how Equity release works.
My home could be repossessed
Answer:- You will never be asked to leave your home until you pass away or move into long term care, as defined by the terms and conditions of the lender. If it is a joint policy this applies to both of you. As long as you comply with the lifetime mortgage terms and conditions, you will not have to leave your home.
Considerations for you:
- Taking out Equity Release may affect your entitlement to means-tested benefits or pension credit
- There could be substantial charges if you repay the loan early
- We consider alternative options that may be available
- We recommended that you discuss with your family