Increases in the costs of consumer goods, underpinned by strong demand and supply chain bottlenecks, have all been factors causing rising inflation. A sharp rise in food prices, along with increases in household energy tariffs and petrol costs have forced the majority of the population to assess household budgets.

Many people with regular and reasonably good monthly incomes are now struggling to cover the cost of everyday living.  These profound financial impacts are often harshly felt by older people, who are no longer working and are without a wage to support them. Indeed, the funds which were put into savings, pensions and investments and planned as enough to fund the ideal retirement, may no longer be sufficient leaving tough decisions on how best to cut monthly expenses.   

The result and alternative to this being, that many older people are now searching for alternative ways to bring in additional money to be able to live a comfortable retirement. Some are also looking for ways to financially support family members, whose budgets have also been affected by the escalating cost of living or unexpected increases in their mortgage rates.

Equity Release can offer a solution to such circumstances, by enabling over 55’s to access a lump sum of tax-free cash by unlocking some money from the value from their home, whilst continuing to fully own and live in the property.

Recently, many more older people are now turning to this solution, with statistics showing a record number of new equity release plans taken out between July and September 2022 – almost 13,500 – an 8% increase on the previous quarter, with new customer numbers increasing by a third year on year, according to the trade body the Equity Release Council.

This has seen equity release hit a new high for Q3 as homeowners draw a record £1.7bn from properties, with many looking to use it to buffer the increasing costs of living.

The cash released from an equity release plan can be taken as a lump-sum or in instalments over time and be spent how you wish, whether that is to fund every day living, gift to family members or to enjoy the finer things in life such as a trip of a lifetime. The good news is, that this is all possible without taking on the burden of additional monthly repayments. 

Equity Release Plans that are regulated by the FCA are a safe way to access some of the equity tied up in your property.

 Equity Release - A Lifetime Mortgage

The type of Equity Release we offer is a lifetime mortgage which we will explain further here. This is a long-term loan on the value of your home, without the need to make monthly repayments. 

Interest is added each year, both to the initial loan amount and any interest previously added, which you can choose to pay off however the loan and interest are usually repaid from the sale of your home, when you (last person, for joint lifetime mortgages) die or need to go into long-term care.

The lender would only receive the debt that is owed and any remaining equity would go to your estate or family. In the event that you owe more than your property is worth, a no negative equity guarantee benefit means that your family or estate is not left with any debt to repay. 

The basic lending criteria is as follows:

  • Minimum age of applicant/s - 55 years old 
  • Age of applicant/s (youngest persons age) and health and value of property determines borrowing amount agreed.
     

Key benefits of Equity Release Plans:

  • A tax free lump sum to spend how you wish 
  • Stay in your home for life or move at any time you wish
  • No mandatory repayments required – not even the interest
  • Interest rate fixed for life
  • Only repayable in the event of death or if moving to long term care* 
  • Remaining equity can be passed to children or other beneficiaries on your death
  • No negative equity guarantee
  • Can be repaid in the event of you having the funds to do so, just like any other mortgage (early redemption penalties may apply).

 

Proud Members of the Equity Release Council

As a member of the Equity Release Council, we only offer plans approved by the council. This guarantees the features and standards highlighted above and means our customers benefit from best possible practice

 

Want to know more?

Our team of expert and friendly advisers can explain how an Equity Release Plan could benefit you. Please call 0800 978 8000, complete our enquiry form or email [email protected] to book a FREE consultation to discuss your needs.

 

Please note this form of lending is most suitable for those over 65, however, it’s possible to do this if you are over 55. It is important to understand that this is a lifetime mortgage and to understand their features and risks, you will need to have a personalised illustration. *Only repayable in the event of death or if moving to long-term care is based on the last person on the policy in terms of policies held jointly.