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Equity Release

Just what is Equity Release?

It is…

  • A Lifetime Mortgage
  • An Enhanced Lifetime Mortgage… and a
  • A Home Reversion Plan.

Equity Release is a loan secured against your home and is one way of releasing some of the equity in your home.

It doesn’t matter if you have paid off your traditional mortgage or not, what Equity Release offers is the opportunity to free up cash from your home.

Tax-free money that you can spend on whatever you want!

You can use the cash to supplement your income, improve your home, to reopen the Bank of Mum and Dad or to finally go on that dream trip!

Equity Release means you can stay in your home until you die or move into long-term care.

You retain 100% ownership of your home (see below about Home Reversion Plans) and no longer need to downsize to get money out of your property. It is also possible to move home, provided the new property is acceptable to the lender.

There are no repayments, although you can make monthly interest payments to reduce the amount that is eventually repaid.

Who should consider Equity Release?

Anyone aged 55 and over who has equity in their home and wants a better balance between their available assets and “bricks and mortar”. Equity Release is now a vital tool in most peoples’ planning, particularly as interest rates are low.

Here is a common scenario

A family property is worth £350,000

Equity Release of 30% creates tax-free cash of £105,000.

The compound interest of 3% payable on the sum means that the amount outstanding may be £141,000 within 10 years. However, the value of the property has to grow by only 1% per annum over that period of time to cover the cost of the debt and 3% per annum to ensure that the debt stays in proportion to the value of the property.

Additional property price growth would mean that the value of the debt, the 30%, would actually decrease.

N.B. these are indicative figures and not intended to be used as an illustration or quotation.  As well, interests rates do fluctuate and the above scenario is only an example.

Equity Release is tailored to the individual needs of each customer and like any financial investment it is important to bear in mind that…

  • Equity Release will reduce the value of your estate and the amount of money that will be left to your beneficiaries.
  • If you take out a Home Reversion Plan, the reversion provider will own all, or a part-share of your home.
  • Taking out a lump sum, or extra cash to supplement your income, may reduce your entitlement to “means-tested” benefits. We will check if this will affect you before making a recommendation.
  • If your local council is partially, or fully funding, your “care at home” it may start charging, or asking you to pay for the service.

To find out more, and the options available to you, please email equityrelease@lawrencemiller.co.uk and our team: Colin Morgan, Matt Isaacs and Alex Russell will be happy to explain more.

Or telephone us on 01633 869000 to have a (no obligation) chat.