Equity Release Explained: Eligibility And Family Consultations

Am I Eligible For Equity Release?

If you are a British homeowner and over the age of 55, then it is very likely that you are eligible for equity release. As with any large financial decision, it is extremely advisable to shop around for the best possible deal for your individual needs. Generally, there is a minimum value your UK property must possess for a successful application, the amount of which will vary depending on your equity provider.

Seek advice on whether you should consider applying for equity release before committing to any deal. Friends and family should be consulted, but it is also advisable to contact industry and financial professionals regarding the terms of your deal and any future plans and bills which will be affected.

The negative equity trap where the loan exceeds the resale value of your home — is a potentially devastating route, and one which must be avoided at all costs. Ensure that whichever plan you agree to adhere to this policy. It is also worth gathering consultation as to whether any equity release plan will affect your benefits eligibility, a fact which many do not consider until it is too late, much to their detriment.

Lifetime Mortgage

There are two main equity release plans which customers tend to choose between: lifetime mortgage and home reversion plans.

Lifetime mortgages are the most popular choice, allowing the applicant to completely retain ownership of their property. Choosing the amount of money to be released from a lifetime mortgage provides a degree of flexibility unavailable in other methods. While a set amount of your property’s value will be eligible for release, it is completely up to you as to how this money will be provided. It may be that it is not all required at first, with the ability to save some for a later date.

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Depending on various factors, such as your age and your property’s value, you will be eligible for higher or lower rates of equity release. Older applicants will be eligible for more of their property’s value to be released upon application, although depending on the initial value, this may not be as important.

Equity release can be a valuable method of releasing much-needed funds; especially considering the initial lump sum will be tax-free.

Family First

Many people use equity release as a means of caring for their family while they are still alive. Inheritance is all well and good, but being there to watch them enjoy the funds is absolutely priceless. There is also inheritance tax to consider, with high-value homes operating at an extremely high level of taxation. Providing your family with financial support is a popular reason for applying for equity release, although it does not need to be only due to dire financial straits. Whether it is to provide them with a more comfortable standard of living or even embark on a luxurious family holiday together, the funds freed up from your property value could be used in countless ways.

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