Negative equity schemes are expensive. Whilst equity release is accessible from some providers from the age of 55, the likelihood is you will live a lot longer, your interest will accrue, and you may end up costing the lenders more than they would make (especially if there is a no negative equity clause). Equity release means you can stay put and don’t have to face the stress and expense of moving. Is Equity Release popular? This means you and your family will not benefit from future house-price rises on the portion you have sold. Equity release means you can stay put and don’t have to face the stress and expense of moving. From initial research to the successful release of funds at completion, you can rely on our team to explain everything in a language that’s easy to understand. With equity release, there’s no need to move. There is no doubt that equity release schemes can be useful, but like most things they come at a cost so think carefully and seek the appropriate advice before you enter into a scheme. However, in as much as it can be an excellent option, it has some limitations & pitfalls. You can do this via a number of policies which let you access – or 'release' – the equity (cash) tied up in your home, if you're 55+. You don’t need to have fully paid off your mortgage to do this. In general, you don’t repay the money unlocked by equity release or the interest on it until you move into long-term care or die. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. Another disadvantage of an equity release scheme is its secured against your home, so should you want to re-mortgage at any point in the future, this may be more difficult. The Top 3 … https://www.which.co.uk/.../equity-release/what-is-equity-release-a5jqy4d36xlv Some people decide to use some of the money they release to make home improvements. Any lender that is a member of the Equity Release Council will provide you with something called a no negative equity guarantee. The longer you borrow money through an equity release plan, the longer interest charges have to build up. By clicking on form field(s)/button(s) or other link(s) on this website or Accept, you agree to the use of cookies and other technologies to process your personal data to enhance and personalise your experience. Do You Qualify for a Property Equity Release? Always obtain independent, professional advice for your own particular situation. It’s worth pointing out that individual circumstances vary and we would recommend seeking the advice of an independent financial advisor to discuss your specific situation. He now works as a freelance writer for a wide range of business and finance publications. Get all the no-obligation information and advice you need about equity release. Equity release might seem like a good option if you want some extra money and don’t want to move house. The minimum age to be accepted in to an equity release scheme is 55, although this can vary according to the provider. Equity release involves taking the value of your home at present, and calculating how much equity you could release now, either via a lump sum or a number of smaller payments. Until that point, your equity release plan won’t cost you anything, aside from any set-up or advice costs. Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income, using the value of the house.. Like to advertise with us? Here Simon Read asks experts to answer readers key questions. If you sign up for equity release, it is inevitable that at least some of the value of your home will have to go to repay the provider when you die or move into care. Remember to take good independent financial advice before making important decisions. In August 2018, 139 Equity Release schemes were available, which is a … Be aware of how these charges are paid. Only by doing this can you start to compare like with like. Question about your subscription? Your equity release windfall can be used for one-off expenses such as home improvements or a holiday of a lifetime, as well as to simply boost your pension income or even help relatives out financially. Reputable providers should offer a “no negative equity guarantee”, which means what customers owe can never exceed the value of their property. The "catch" is that the income-provider must be repaid at a later stage, usually when the homeowner dies. You will receive far less money than you would from selling the property on the open market – although of course in that situation you would still have to find somewhere else to live. Your monthly outgoings won’t increase. When and how will the total amount of charges have to be paid? This means that if something unexpected happens and your property is sold for less than the amount that you owe, your estate won’t have to make up the shortfall. The most obvious one would be downsizing. It’s a highly regulated (by the FCA) sector with upmost consumer protection. It would be beneficial to discuss the option with a financial adviser to receive their expert opinion before going ahead with anything. If you’re in good health and have no trouble making the move, downsizing can save you a great deal of money. The money could also be used for home improvements or funding for care which often is a key influencing factor in later life. Alternatively, visit our equity release page to find out more. Be wary of early repayment charges. Over 55 and UK home worth £70k or more? Deciding to take out an equity release plan is a big step and it is important that you weigh up the advantages and potential disadvantages of raising extra money in this way. You should not rely on this information to make (or refrain from making) any decisions. Therefore, it is not a decision you should rush in to. They can provide either a large lump sum of cash or regular mounts when its needed in later life. In general, you don’t repay the money unlocked by equity release or the interest on it until you move into long-term care or die. Equity release is a way for people over 60 to get at the cash locked in the value of their homes. ( 18 June 2019 ). Set up costs can be high, which will include a valuation fee, solicitor fees, application fee and any advice costs – so ensure you know those costs in advance. 8836447. 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