Later Life Lending: How does equity release work and could it be the right option for me?
After years of working hard to make monthly mortgage payments, your home is likely to be your biggest asset, particularly, if you’ve benefited from an increase in house prices over the last few decades.
The value of your home (minus any existing mortgage and other loans secured against it) is referred to as equity. This equity is often passed on as an inheritance. However, an increasing number of people are tapping into some of this value to help boost their retirement finances or help their children get onto the property ladder.
If you’re wondering if equity release is right for you, you’re in the right place. This article will take you through some of the basics of equity release before speaking to an expert equity release adviser.
What is equity release?
Equity release is a way for homeowners aged 55 or over to release tax -free funds from their homes without having to move. With a lifetime mortgage (the most popular type of equity release), there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. Usually, that’s when you, or the last remaining applicant, either passes away or moves into long-term care. With a lifetime mortgage, you’ll still retain full ownership of your home.
The money can be released to you as either a single lump sum or as an initial release amount, then further releases can be taken as and when needed, known as a drawdown lifetime mortgage.
With a lifetime mortgage, you have the right to remain in your home for as long as you choose to, or until you move into full time residential care or pass away. You also have the freedom to move to another property and transfer your loan without an early repayment charge (subject to the new property being acceptable to your lender at the time).
You will never owe more than the value of your home with the no negative equity guarantee.
The money can be used for a variety of purposes, and is often used for:
- Repaying an existing interest-only mortgage at the end of its term
- Gifting to family or providing them with an ‘early inheritance’
- Home improvements
- Taking the holiday of a lifetime
Lifetime Mortgage:
You borrow money secured against the value of your home and retain full ownership. The interest can be rolled up and repaid upon eventual sale or interim payments can be made so not to eat into your equity.
Are you eligible??
Hundreds of thousands of people are already enjoying the benefits of cash they’ve unlocked from their homes. However, equity release may not be suitable for everyone, which is why it’s important to get expert advice before you make a decision.
You may be eligible for a lifetime mortgage if:
- You are aged 55 and over
- You are a UK resident
- You are a homeowner with a property worth at least £70,000
Mortgage Advice Bureau Later Life will help you to make the right decision
To make sure you receive the best possible advice, we have specialist equity release advisers that can advise you on lifetime mortgages. Mortgage Advice Bureau Later Life work with Key Retirement Solutions who provide our Later life lending proposition.
We can help you to arrange a free consultation with an expert equity release adviser. To book a free consultation for you or a family member, please get in contact.