What is Equity Release?
Equity release can be a helpful financial option for those looking to raise capital. It is a type of mortgage that helps homeowners who are over the age of 55 to access stored equity within their home.
The equity within a property is the value of the property minus any financial obligations on that property, usually the mortgage.
What are the benefits of Equity Release?
Equity release unlocks financial value that is tied up in a home, creating an additional stream of income, or lump sum that can be utilised immediately. Often, homeowners use that money for renovations, home improvements, to cover the cost of nursing care/home help whilst remaining in their home or to generally improve their finances in retirement.
Equity released from a home is tax-free and enables the homeowner to remain living in the home without selling.
What were the circumstances that caused you to look for a financial adviser?
Equity release to pay off mortgage
How has Craig Atkins helped you?
Have you seen the outcome you were hoping for?
What could they have done better?
Nothing hugely efficient and thorough
– Jonathan, West Sussex
Are there any drawbacks to Equity Release?
Equity release is a cash advance on the value of your home. By tapping into the stored value within that home, the inheritance left for beneficiaries of an estate may be reduced.
Today, equity release schemes are well regulated, offering peace of mind and security to homeowners and many schemes also come with a “negative equity guarantee” to ensure that no debt is left to beneficiaries after the home owners death.
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Equity Release at a glance
Tax-free income to meet your financial needs
Flexible mortgage schemes to support your specific financial situation
Regulated by the Financial Conduct Authority
Are there different types of Equity Release schemes?
A roll-up mortgage – this is when the maximum percentage of a home’s value can be released via a loan. Instead of paying interest on the loan each month however, you choose to allow the interest to be rolled up and added to the loan so that your debt gets larger. The amount you originally borrowed, plus the accumulated interest, which has been rolled-up, is only repaid when your home is sold.
Drawdown mortgages are roll-up schemes where instead of you releasing the entire maximum amount of equity available at the outset, a maximum facility is created and made available to you to take a minimum amount initially and then only draw down further money when needed. Interest is only charged on the amount actually taken and not on the full facility. This helps avoid debt build up and also overcomes the mistake of taking the maximum available simply to deposit it at lower rates in a bank or building society until you need it.
Home Revision Schemes
With a home revision scheme, a homeowner chooses to sell their property to the provider at 20% – 60% of the home’s value, with the right to remain on the premises rent-free for life.
Equity Release Explained
For a full explanation of Equity release, the benefits, risks and what’s involved, read our fuller blog article here: https://cafinancialservices.co.uk/equity-release-explained/