You may have noticed an increase in TV advertising for Equity Release over the last month or so as Providers know that people use January to book their holidays and also try and raise funds after overspending at Christmas!
Have you ever wondered if Equity Release is for you but never really investigated how it works?
One little known fact is that if you have a Pre Existing Condition it may be possible to raise more money through Equity Release than someone who is in ‘perfect’ health?
There are however may complex issues to consider when looking at Equity Release and you should always take advice from a suitably qualified professional, using a plan approved by the Equity Release Council.
To help you decide if Equity Release is something you should consider we have interviewed Christian Kudzi from Retirement Solutions to provide the basic information everyone should know. Retirement Solutions have also provided us with a downloadable Equity Release Guide *. If after reading the interview you wish to speak directly to an Equity Release Expert from Retirement Solutions you can also request a free initial consultation* below.
Hi Christian, can you please briefly summarise what Equity Release is?
Equity Release allows homeowners over the age of 55 to release some of the money tied up in their homes without having to move. Equity Release is fully regulated and anyone considering equity release should always seek advice from an Independent Equity Release Specialist Adviser.
Are there different types of equity release?
Yes. There are just under 300 equity release plans available that are approved by the Equity Release Council. It is therefore vital that anyone considering Equity Release speaks to an Independent Specialist Adviser so that they receive the correct advice.
How much Equity can be released? Do you have to take it all in one go?
The amount that can be released will depend upon the age of the youngest homeowner (minimum age of 55) and the value of the property. Some plans will also take your health & lifestyle into account as well. The amount released can be taken as an initial one off amount or in smaller amounts over time, as and when it is needed.
So, if you have a Pre Existing Condition how does that effect things?
Some plans will take into account your health and lifestyle when determining what terms they will offer you. Conditions such as High Blood Pressure or lifestyle habits such as Smoking can result in a higher amount of equity being available for release or even a lower interest rate being applied.
What can the money be spent on?
It’s up to you what you spend the money on, although it is not wise to release equity for investment purposes. Any existing mortgage or secured loans must be repaid either before the equity release has completed or by using the equity release funds as a means of repayment.
Who is Equity Release ideally for?
Equity Release can be an option for any homeowner aged 55 or over. However, it is not necessarily the right option for everyone, so seeking advice from an Independent Equity Release Specialist is vital.
I think this would be ideal for my Parents as they have limited income but a valuable property. They however are reluctant as they want to leave a large inheritance to us, even though we are financially independent. Is this common?
Very much so. Many parents understandable want to pass on their wealth to their children and often this inheritance is ‘needed’ by the children to help with their lifestyle.
There are also however many cases where the children would prefer the parents to benefit from the value in their home. We suggest that if describes your circumstances you consider downloading our Equity Release Guide or request an initial consultation to allow you to broach the subject armed with appropriate information.
Wouldn’t you just be better downsizing?
Moving & downsizing should also be considered as an option when thinking about Equity Release. Equity Release can also be used as part of the Downsizing move or for Upsizing.
Will I still be able to leave an inheritance?
Yes – Plans can have an Inheritance Protection built into them that effectively guarantees a percentage of the property value is left for family and beneficiaries.
Will it affect my benefits?
If you are in receipt of any State or Welfare Benefits an Independent Equity Release Specialist Adviser will advise you on the best way to release equity from your home to minimise any impact on these benefits. Plans known as ‘Drawdown’ can allow equity to be released in smaller amounts so that any existing benefits can be maintained.
If I live a long time will I owe more than the house is worth?
You should only consider plans approved by the Equity Release Council as these come with a No Negative Equity Guarantee. This means that the borrower will never owe more than the value of the property.
Do I need to discuss it with my family?
You should discuss any plans to release equity with your family and ask your family to be present at any meetings you have with Independent Equity Release Specialist Advisers.
What if you want to move, or you die and your Spouse wants to move, will they be able to?
Moving is possible after taking out an equity release plan, with a number of plans containing Downsizing Protection.
What happens if you go into a nursing home?
Equity Release plans are usually due to be repaid when the homeowner(s) are no longer living in the property. This could be because they have passed away, or have moved into a nursing home.
How much does it usually cost to set up and what rate of interest is normally charged?
The rates of interest and set up costs will vary according to which equity release plan has been recommended. All associated costs will be disclosed in writing before a decision is made to proceed, and currently a number of plans offer a free survey and free lender’s arrangement fees.
What’s the Equity Release Council?
The Equity Release Council was originally launched in 1991 and was created to support safe equity release products and to safeguard the interests of homeowners. If you are considering Equity Release you should only consider a plan that has been approved by the Equity Release Council.
Are there specialists in Equity Release?
There are Specialist Equity Release Advice companies available, and you should only consider those that are truly Independent so that they can source products from the entire Equity Release market for you.
Is it dealt with by telephone or is it possible to have a face to face meeting?
Both telephone & face to face advisers are available. Most people considering Equity Release prefer a face to face meeting so that they get to meet & know the Adviser who they are dealing with
Thanks Christian, how is it possible to get more information?
Many thanks Christian I am sure our readers will find this information very useful and it will help dispel some of the myths associated with Equity Release.
If this is of interest to you or maybe to another family member please click below to either download the Equity Release Guide or request a consultation.
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