ThinkIFA guide to ‘Equity Release’
If your home has increased in value or you have paid off a considerable amount of your mortgage, then you could potentially benefit from equity release.
This is the difference between the remaining balance of your mortgage and the current value of your home.
It can be of enormous benefit to people who wish to unlock the value of their homes without having to move, especially older couples.
What Can Property Equity be Used For?
Some people just want access to the cash that is tied up in their home. Releasing the equity can give them a lump sum or they can choose both a lump sum and a regular income which can be useful for retired couples.
Once the property is sold, the money is repaid to the lender with any amount left over going to either yourselves or your beneficiaries.
As releasing the equity in your property can affect the amount you leave behind to loved ones, it’s a good idea to involve them in your plans and speak to an independent financial advisor to ensure that you take advantage of the best equity release deals out there.
How to Release Equity in Your Property
There are two ways to unlock the value of your home:
1 – Take Out a Lifetime Mortgage
You can borrow money which is secured against the value of your home. This gives you the advantage of still living in your home with the amount borrowed being repaid once the property is sold.
2 – Selling All or Part of Your Home
In what is termed as home reversion or part reversion schemes, the home owner sells part or all of their property to a reversion company.
The owners can remain in the property until they die or decide to move home when the part of the property that was sold then comes under the full ownership of the reversion company. If anything is left over it will be passed to yourselves or your estate.
There are many different lifetime mortgage options and if you decide to sell part of your home you would need to bear in mind that the price you get will not reflect current market value.
Always seek professional advice so that the option you choose is best suited to your needs and not those of the lender.
What should I do now?
If you would like to speak with an independent financial adviser then please fill in the contact form below.