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What Is Equity Release ?
An equity release plan enables you to release some of the cash tied up in your home without you having to move. The cash released is tax free and can be taken in one lump sum or in smaller chunks as and when you need it
Who Can Benefit From Equity Release?
- If you are a homeowner and aged 55 or older you may be eligible to release funds from the value of your property.
- The amount available will depend on your age and property value. Your property must be worth a minimum £70,000.
- You can access a larger percentage of your home’s value the older you get and some lenders will take into account your health and lifestyle to increase the amount you can release with an enhanced plan.
- If you are planning to move in the future you can still take out an equity release plan now.
How Can You Unlock Tax Free Cash
There are two ways to unlock cash from your home, a Lifetime Mortgage and Home Reversion.
Lifetime Mortgage
The most popular type of equity release plan is a lifetime mortgage. A loan is secured against your home and in return, you can release a tax-free cash lump sum. The amount of tax-free cash you can release is based on your age and the value of your home. Interest is added throughout the lifetime of the loan on a compound basis as typically you will not be required to pay regular monthly repayments. However, you can pay the interest if you want to, the choice is yours. The amount of equity released plus the interest accrued will be repaid when you die or move into long-term care.
Payment plans – some plans allow you to pay some or all of the interest or repay some of the capital. This could substantially reduce the amount that is owed when the plan is repaid.
Protected plans – with some lifetime mortgages, it is possible to protect a percentage of the property’s future value to leave behind as an inheritance, giving you peace of mind in knowing your loved ones will be taken care of.
Drawdown Lifetime Mortgage
Drawdown plans work in a similar way to standard lifetime mortgages but with the flexibility to ‘drawdown’ cash as and when you need it. You can take a smaller initial amount and then release cash over time. This can be more cost-effective as the interest is only added as and when the amounts are released so you could pay less interest over the course of the loan.
Enhanced Lifetime Mortgage
You could be entitled to release a larger amount of equity from your home if you have certain pre-existing health conditions or lifestyle choices (e.g. smoking). There are a large number of conditions that qualify including diabetes, heart conditions, cancer, etc. Our expert advisors can talk you through the questions to see if you qualify for an enhanced plan.
Inheritance Protection
You can guarantee an inheritance for your loved ones by ring-fencing a proportion of your property value with a protected Lifetime Mortgage. This allows you to guarantee that a percentage of the future value of your home will be left to your family when the property is sold, regardless of how much interest accrues.
Average Amount of Equity Released By Region, Q4 2020*
Product Mix Q4, 2020
Popular uses of equity release Q4, 2020*
-
61%
Improve their Home and/or garden
-
28%
Paying off debt (credit cards / loans)
-
23%
Go on holiday
-
27%
Gift money to family / friends
-
20%
Clear outstanding mortgage
What Is Equity Release ?
An equity release plan enables you to release some of the cash tied up in your home without you having to move. The cash released is tax free and can be taken in one lump sum or in smaller chunks as and when you need it
Who Can Benefit From Equity Release?
- If you are a homeowner and aged 55 or older you may be eligible to release funds from the value of your property.
- The amount available will depend on your age and property value. Your property must be worth a minimum £70,000.
- You can access a larger percentage of your home’s value the older you get and some lenders will take into account your health and lifestyle to increase the amount you can release with an enhanced plan.
- If you are planning to move in the future you can still take out an equity release plan now.
How Can You Unlock Tax Free Cash
There are two ways to unlock cash from your home, a Lifetime Mortgage and Home Reversion.
Lifetime Mortgage
The most popular type of equity release plan is a lifetime mortgage. A loan is secured against your home and in return, you can release a tax-free cash lump sum. The amount of tax-free cash you can release is based on your age and the value of your home. Interest is added throughout the lifetime of the loan on a compound basis as typically you will not be required to pay regular monthly repayments. However, you can pay the interest if you want to, the choice is yours. The amount of equity released plus the interest accrued will be repaid when you die or move into long-term care.
Payment plans – some plans allow you to pay some or all of the interest or repay some of the capital. This could substantially reduce the amount that is owed when the plan is repaid.
Protected plans – with some lifetime mortgages, it is possible to protect a percentage of the property’s future value to leave behind as an inheritance, giving you peace of mind in knowing your loved ones will be taken care of.
Popular uses of equity release Q4, 2020*
-
61%
Improve their Home and/or garden
-
28%
Paying off debt (credit cards / loans)
-
23%
Go on holiday
-
27%
Gift money to family / friends
-
20%
Clear outstanding mortgage
Product Mix Q4, 2020
Drawdown Lifetime Mortgage
Drawdown plans work in a similar way to standard lifetime mortgages but with the flexibility to ‘drawdown’ cash as and when you need it. You can take a smaller initial amount and then release cash over time. This can be more cost-effective as the interest is only added as and when the amounts are released so you could pay less interest over the course of the loan.
Enhanced Lifetime Mortgage
You could be entitled to release a larger amount of equity from your home if you have certain pre-existing health conditions or lifestyle choices (e.g. smoking). There are a large number of conditions that qualify including diabetes, heart conditions, cancer, etc. Our expert advisors can talk you through the questions to see if you qualify for an enhanced plan.
Inheritance Protection
You can guarantee an inheritance for your loved ones by ring-fencing a proportion of your property value with a protected Lifetime Mortgage. This allows you to guarantee that a percentage of the future value of your home will be left to your family when the property is sold, regardless of how much interest accrues.
Click Here To Check Eligibility