Did you know that as part of our service we now offer equity release?

But what exactly is equity release?

Equity is the difference between the value of your home and any mortgage that you may have. Equity release allows you to gain access to some of this money. The money you earn from releasing equity can be spent on almost anything that you wish. Some of the most popular reasons include home improvements and helping your family out financially.

There are no repayments on the vast majority of these plans, due to what you owe being paid once your property is sold.

Equity releases growth in popularity

Due to property value rapidly increasing it’s becoming a much larger and more valuable asset. Due to property pricing increasing in such an extreme way homes tend to have a much larger value than when they were initially bought. On average, UK house pricing has increased by 20%. Due to this 20% increase in house prices releasing a percentage of this money would be a major help financially.

Can you benefit from equity release?

Equity release has now helped people across the UK but it is not right for everyone.

To be eligible for equity release you must own your home and your youngest homeowner must be 55 or over.

The amount of money that you can receive will depend upon your age and the value of your property. You can use our calculator to find out how much you can release(https://www.joslinrhodes.co.uk/equity-release/max-equity-release-calculator/).

Reasons for releasing equity

Releasing equity is done for a number of reasons, some of the most popular include:

-Home and garden improvements

-day to day living and other costs

-to clear debt and mortgage

-o help the family

-to buy a brand-new car

-dream holiday

What people spend equity release on

What types of equity release are there?

Lifetime mortgage

A lifetime mortgage allows you to release a lump sum of cash from your home. This type of scheme allows you to take a loan against the value of your home. You don’t need to make any repayments until you die or move into long-term care.

Drawdown mortgage

A drawdown mortgage is similar to a lifetime mortgage, but the difference is that you can access your money with more flexibility. Unlike a lifetime mortgage, you don’t have to take a lump sum upfront you can take cash out when you need it.

Interest-only lifetime mortgage

An interest-only lifetime mortgage allows you to make monthly payments to reduce the effect on the value of your estate

Home reversion plan

A home reversion plan is a type of equity release scheme where you sell all or part of your property to an equity release provider in return for a lump sum or regular payments.

What is equity release?

Equity Release is the process of turning your home’s equity into cash that you can spend as you choose. This process can be accessed by any homeowner aged 55 and over.  If the property is joint owned both owners must be over 55. The amount of cash you receive depends on your age and the value of your property.

Different equity plans will see different outcomes. For example, with some plans, you will not need to make any repayments, and in others like the lifetime mortgage, you continue to own your home.

These plans all come with a no negative equity guarantee. A no negative equity guarantee means that you will never pass the dept on.

Types of equity release schemes

There are several types of equity release, including a lifetime mortgage, lump-sum lifetime mortgage, drawdown lifetime mortgage, interest only lifetime mortgage, and home reversion plans.

What is a Lifetime Mortgages?

A lifetime mortgage is one of the most well-known and used types of equity release in the UK. This type of scheme allows you to take a loan against the value of your home. You don’t need to make any repayments until you die or move into long-term care.

What is a Lump-sum Lifetime Mortgage?

A lump sum lifetime mortgage means you will be given your full lump sum amount in one go rather than a series of instalments.

What is a Drawdown Lifetime Mortgage?

A drawdown lifetime mortgage is a type of equity release that allows you to access your money in a series of small instalments rather than a lump sum.

What is an Interest Only Lifetime Mortgage?

An interest-only lifetime mortgage is a type of equity release where you only have to make repayments on the interest that has accrued on the loan, and not the amount borrowed.

What is a Home Reversion Plan?

A home reversion plan is a type of equity release scheme where you sell all or part of your property to an equity release provider in return for a lump sum or regular payments.

Is equity release a good option for you?

Equity Release is the process of turning your home’s equity into cash that you can spend as you choose. The catch with equity release is the fact that the money released from your house will need to be repaid. However, you may not have to be the one who pays off this debt. Upon your death or when you move into long-term care the money will have to be repaid. Your next of kin will have to deal with this repayment if you have not.

Equity release has many benefits such as:

-You can gain access to money that wasn’t liquid before, either in a lump sum or in smaller payments

-If you choose a lifetime mortgage, you will retain ownership of your home, and still be able to live there.

Equity release is transferable, so you will still be able to move in the future if you wish to.

But there are also drawbacks such as:

  • -You end up borrowing more money than you need with a lifetime mortgage, even if you do not take monthly payments.
  • The interest rate which you pay on your equity release usually increases as the money you borrow increases.
  • With a home reversion plan, you give up ownership of a part-share, or all of your home to the reversion company.

Equity release is not for everyone, due to it having select benefits and drawbacks. So, it is important to consider all of your options. Some other options available to you include down-sizing to a smaller home, remortgaging, selling fixed assets, researching potential grants, and budgeting.

Equity release might seem like the easiest option, but this shouldn’t be the only reason why you choose this. Before you choose equity release, you seriously need to consider every option available to you.

Equity release calculator

If you would like to work out how much equity could be released from your home you can use this equity release calculator.

Use our free equity release calculator(https://www.joslinrhodes.co.uk/equity-release/max-equity-release-calculator/)

To calculate equity release you will need your property value and your age. From age 55 you can release a minimum of 29.5% of your property’s value.

How much could I release?

The amount of money that you can release through equity release will heavily depend upon your age and property value. Typically, with an older age you can release more equity.

At 55 with perfect health, assuming your home is worth £200,000, the maximum equity you can release is £59,000. At age 55 with a medically enhanced rate, the maximum equity you can release is £87,200.

The maximum equity you can release is affected by three different factors. These factors are property value, the applicant’s age, and the medical conditions you have.

How does your medical history affect equity release?

Depending on your medical history you may be eligible for an enhanced lifetime mortgage. To be eligible for this it will depend upon your height, height, the medical conditions you have

How does your age affect equity release?

Your age is the biggest determining factor in how much money or equity you can release from your home. Put simply the older you are the more equity you can release. If it’s a joint application the age of the youngest is the one taken into consideration.

Are you eligible?

To be eligible for equity release you must be over the age of 55, be a homeowner in the UK and your property be worth at least £70,000.

Receiving your money

Equity Release is the process of turning your home’s equity into cash that you can spend as you choose. The money you receive can either come as a big lump sum or a string of smaller lump sums.

Is equity release regulated?

Equity release is regulated by the Financial Conduct Authority, which is the UK’s financial services regulator. There is also the Equity Release Council in place who works to make sure there’s a safe environment for consumers considering and using equity release.

The equity release council follows these core principles guiding the rules and regulations, which is rule 3.3:

‘Customer vulnerability is not static and can evolve or change over time’. Vulnerability Triggers may include:

  1. age, physical or mental health
  2. low literacy, numerical and language skills
  3. redundancy, relationship breakdown or bereavement
  4. medical condition or illness including addiction
  5. financial difficulties including financial abuse
  6. coercion from a third-party or a power of attorney acting for the customer who has not received independent financial advice
  7. loneliness and/or lack of support.

What if I want to repay early?

Yes, you can pay off the equity release early. Equity release has been made to last as a debt until death or you move into long-term care.

Without Lasting Power of Attorney your partner and dependents could be faced with problems such as:

  • Not being able to access any money held in accounts, savings, or pensions in your name
  • Not being able to access any joint bank accounts they hold with you
  • Not being able to give instructions to utility companies where you are the account holder
  • Not being able to sell any property you own jointly, even where the intention is for your benefit, such as assisted living
  • Perhaps the most unpleasant surprise for people who find themselves in this situation is that assets you hold jointly also become frozen. This includes joint bank accounts and jointly owned property.

This can often cause undue financial hardship and distress at a time when they’re trying to cope with a life changing event.

Who can I talk to about putting Lasting Power of Attorney in place?

Our dedicated Protect team are here to help you with all aspects of estate planning, including LPAs, will writing, Trusts to help protect against care fees, and more.

Click the button below to arrange your call.

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