Equity release has soared in popularity over the last few years and is becoming a core part of later life financial planning.
As competition among equity release lenders has increased, the number of product options available to borrowers has also increased while rates have gone down. There is now more flexibility than ever before to meet the growing demand from homeowners looking to unlock some of the cash tied up in their property.
How does equity release work?
If you are considering accessing some of the equity in your home, you’ll want to understand how equity release works.
In a nutshell, equity release allows you to borrow money secured against the value of your home. You are not obliged to make any repayments if you do not wish to. The loan plus interest is typically repaid when you sell your home, go into long term care, or die.
If you want to release equity, firstly you should speak to a qualified equity release adviser, like Personal Retirement Planning, who can recommend the most suitable product and lender for your requirements. As equity release advisers, we are best placed to carefully explain your options and ensure that you are well-equipped to make the right decision for your circumstances. If you decide to go ahead, we can help to process your application and guide you through the journey.
Once you have chosen a lender and an offer has been issued, the lender will carry out a valuation to ensure your property satisfies their lending requirements.
All equity release borrowers must appoint a solicitor to ensure that they are making a suitable decision for their financial circumstances. Your solicitor will deal with the legal paperwork and ensure that everything is in order.
Once the legalities are complete, your lender will release the funds to your solicitor. Any outstanding fees such as advice and legal fees will be deducted from the loan before the funds are transferred to you.
How long does it take for the funds to be released?
The entire process from start to finish typically takes 8 to 12 weeks although this can vary depending on your individual circumstances.
Who can release equity?
To release equity, you must be a homeowner aged 55 or over with a property worth at least £70,000. Other eligibility criteria may apply depending on the lender you choose. Personal Retirement Planning can advise on the different criteria for each lender and recommend the most suitable option for you.
How much can you release?
The amount of equity you can release depends on your property value, your age, and your health and lifestyle. Generally, the older you are the more you can release.
What can you spend the money on?
You can spend the money however you like!
Some of the most popular reasons why people release equity include:
• To purchase a second home or a holiday home
• To repay their existing mortgage
• To clear credit cards and loans
• To make home improvements
• To help family get onto the property ladder
• To supplement their retirement income
• To split wealth and assets during a divorce
• To reduce inheritance tax
How do you repay an equity release mortgage?
By their nature, equity release mortgages, also known as lifetime mortgages, do not require monthly repayments. The loan plus interest is usually repaid when you go into long term care or die.
However, if you wish to make voluntary repayments to reduce the interest and retain as much equity in your property as possible then you can. You will need to let your equity release adviser know so they can recommend the most suitable product that allows for repayments.
All equity release loans that are approved by the Equity Release Council come with a ‘no negative equity guarantee’ which means that you will never owe more than your property is worth. Personal Retirement Planning is a proud member of the Equity Release Council.
How do I start the equity release process?
If you are ready to speak to an equity release adviser, Personal Retirement Planning can help you to understand your options and determine whether equity release is right for your circumstances. Please give Barry Leigh a call on 07980 210953, we look forward to hearing from you and helping you to start your new chapter.