this article is taken from our December newsletter.

Do you own your own property? Are you over 55? Do you consider yourself “asset rich but cash poor”? Then Equity Release might be just the thing for you.

We’re finding Equity Release is being used more and more by mature people looking to enjoy their lives by unlocking cash tied up in their home.

One of the most popular uses of Equity Release was to pay off an existing mortgage debt. This is usually because the existing mortgage was an interest only mortgage with a capital amount outstanding, but which is low when compared to the value of the property. For people who have no means of repaying the capital in an interest only mortgage, Equity Release might be the solution.

Some people use the funds released through Equity Release to carry out improvements to their property or to pay for a once in a lifetime holiday – or anything in between!

Here are 5 quick facts about Equity Release:

  1. Equity Release is safe – the equity release market has been fully regulated by the Financial Conduct Authority (formerly the Financial Services Authority) since 2007
  2. Equity Release is flexible – today’s products are designed to support customers in different situations. For example, customers have the option to pay back the interest charged each month to avoid the debt increasing. Alternatively, they can create a “reserve” of money over and above the initial release which can be drawn down at any time in the future.
  3. You can’t lose your home – All Equity Release Council(ERC) member providers include guarantees in their equity release plans that let you stay in your own home for the rest of your life.
  4. Your children won’t be a saddled with any debt – Equity Release Council approved equity release plans from providers come with a “no negative equity” guarantee to prevent you owing more than the value of your home should you choose to let the interest roll up rather than pay it back each month.
  5. You can move house – As long as the new property meets the equity release provider criteria, you can take your plan with you to another property.

If you are thinking of taking out an equity release plan or know someone who might benefit from an equity release plan, then you need to find out as much as you can about your options.  So, where do you turn to for advice? Although Equity Release is a type of mortgage, a mortgage broker is unable to provide advice unless they hold a specialist Equity Release qualification. You need to find an Independent adviser who holds this qualification and who specialises in this complex area.

If you would like to find out more, please get in touch.