Equity release and lifetime mortgages
Equity release and lifetime mortgages
When approaching retirement, you may worry about how you can make ends meet when you stop working. Will your pensions be enough to sustain the lifestyle you would like?
You may decide that you would like some additional funds to allow you to really enjoy your retirement.
The main residence may be the most valuable asset you have acquired during your working life.
Benefits of equity release
- Receive a lump sum of cash tax free
- No obligation to monthly repayments
- The right to remain in your property for the rest of your life
- Reduced inheritance tax liability
- Debt consolidation – including existing mortgages
- Spend the money however you wish
- No negative equity guarantee
Releasing some of the wealth from your home can help with things such as: home improvements, paying off existing mortgages, clearing debts, dream holidays, second homes, school fees and helping with children’s house deposits.
The new range of Lifetime Mortgages are a valuable option to have for retirement and financial planning, providing access to tax free capital to spend as required. No repayments are required during your lifetime unless you choose to, whilst you retain full home ownership.
As independent advisers, we offer advice on Equity release and Lifetime Mortgages from the whole of market from lenders approved by the Equity Release Council.
Choosing the right company to help you release money from your home is important.
The equity release market has a wide range of options available to suit lender’s needs. With many different options it is important to get advice from an expert to ensure that you gain access to the best product for your situation.
At Hawsons Wealth Management we pride ourselves on a personal service from an Independent Financial adviser specialising in Equity Release. Being independent means that we are not limited to the lenders we can recommend. We can provide advice on the whole of the market, meaning you will receive the best available product for your requirements.
Misconceptions of equity release
Equity Release has had a negative reputation over the years. In the past some consumers suffered from various unfavourable outcomes such as negative equity on their homes. In recent times significant changes to the product’s regulation has seen equity release become a hugely beneficial and effective way to help with financial planning.
Discussions about equity release with friends and family often provoke a negative initial reaction. This often deters consumers from exploring the product further.
We are more than happy to involve family in the discussions around equity release and help to allay some of the misconceptions.
The following statements are misconceptions of Equity Release which do not apply to the modern style Lifetime Mortgages:
1) We will not be able to move home.
False. All equity release plans approved by the Equity Release Council guarantee the right to move your plan to a new property as long as the property meets lending criteria.
2) Our debt may exceed the value of the property.
False. All plans approved by the Equity Release Council have a no negative equity guarantee This means that you will never owe more than the value of your home. Therefore, excess debt will not be passed on to your beneficiaries.
3) We will no longer own our home
False for lifetime mortgages. You will always own your home with a lifetime mortgage – the most popular type of equity release plan.
4) We will have monthly repayments
False. You are not obliged to make monthly repayments with a lifetime mortgage. The mortgage interest rolls up until death of the applicants (or permanent movement into long-term care). When the plan comes to an end, the capital and rolled up interest will be repaid. Plans that allow partial capital or interest payments to be made are available depending on your circumstances.
We are happy to arrange a free consultation to discuss your requirements in depth. This can be at one of our three offices or at your home/workplace if this is more convenient.
A lifetime mortgage product is the most popular Equity Release product currently available
- You retain 100% ownership of your property
- You have the right to sell at any time
- You can transfer/port the mortgage to a new property that is acceptable to the lender
However, unlike a conventional mortgage, you are not required to pay mortgage payments throughout the term. You can let the interest ‘roll-up’ and accumulate. The mortgage will continue until you or, if in joint names, the last survivor either passes away or moves into long term care. Another key difference between a lifetime mortgage and a conventional one is the way in which your loan sum is calculated. With a conventional mortgage, income and financial commitments are the significant drivers of affordability. Whereas, for lifetime mortgages, the age of the youngest applicant and the property valuation and potentially any health issues.
You must be a homeowner of at least 55-years-old to qualify for an equity release Lifetime Mortgage.
The older the applicant and the greater the amount of equity owned in the property the larger the amount of loan available.
Usually, the rate of interest for equity release is fixed for life. Therefore, if you decide to let the interest roll-up, you can accurately forecast the sum owed throughout the term on a year by year basis. You will receive annual statements that show the sum owed to the lender.
Some clients may prefer to make the interest payments to avoid any roll up of outstanding debt.
An applicant’s income and financial commitments do not matter unless you are considering paying off the interest on the loan.
All the plans that we recommend are approved by the equity release council and provide a ‘no negative equity guarantee’. This means that when your property is sold at market value, on the death of last survivor, if the proceeds are not enough to pay the amount due, lenders will not ask you or your beneficiaries to repay the shortfall. This guarantee is included as standard at no additional cost.
Contact us for a free initial meeting
To find out more about how one of the leading firms of accountants in Sheffield, Doncaster and Northampton can help you, please contact one of our specialists. We believe in long-term client relationships and understand the importance of meeting to establish that you like us and we like you. This is why we offer all new clients a free initial meeting which will enable you to have a discussion about you and your business issues.
We look forward to hearing from you!