Equity Release
If I take out an equity release scheme, do I risk losing my home?
No. For a lifetim mortgage the amount of money you borrow against the value of your home, plus any rolled-up interest, can never go above the value of the property – when it is sold at the end of your plan – due to the No Negative Equity Guarantee.
It is worth nothing that with a Home Reversion Plan* you do sell a percentage of your home.
*We do not provide advice on Home Reversion Plans.
What impact will Equity Release have on my family?
Taking out an equity release plan could leave your family with little or nothing to inherit from your property. You need to be comfortable with this possible outcome and may wish to discuss it with them before committing yourself. You may also want to consider including your family in any discussions you have with your financial adviser or your solicitor.
You may be considering releasing equity from your home to help younger family members get on to the property ladder or pay for school or university fees etc. If this is the case, you need to consider the implications of releasing the equity now, as it will not be available later should you need it for other purposes
What criteria do I have to satisfy for Equity Release?
Lifetime mortgages are suitable for individuals or couples who own their own home which is their main residential property. To qualify for a lifetime mortgage, you need to be aged 55 and over. If you are taking out the plan with your partner, then the age of the youngest borrower must be at least 55. For a home reversion plans you must be a minimum of 60 years old. A valuation will form part of the application process to establish if the property is suitable as security.
What is the difference between a Lifetime Mortgage and a Home Reversion Plan?
The main difference between a lifetime mortgage and a home reversion plan is when you take out a lifetime mortgage you retain ownership of your home. With home reversion plans, you sell a share of your home in exchange for a lump sum of money or a lifetime of regular income.
The other difference is that with a lifetime mortgage, a fixed interest rate is agreed at the time you take out the plan. This interest builds up as compound interest over the years. With home reversion plans, there is no interest to pay as it is technically not a loan. However, if your property increases in value, you will only benefit from the increase in value of the proportion you still own.
We do not provide advice on home reversion plans.
How much can I borrow for Equity Release?
Equity Release is the umbrella term for two types of financial products:
Lifetime Mortgages – a mortgage in which the debt is repaid upon death or long term care. You retain ownership of your home.
Home Reversion Plan – where you sell your home at a big discount but are allowed to live there until death or long term care.
We do not provide advice on Home Reversion Plans so this answer will only be in regards to a Lifetime Mortgage.
The borrowing amount on a Lifetime Mortgage is based on two main factors; The youngest borrowers age and the value of the property.
Lifetime mortgage providers have calculations where they take borrowers ages vs the value of the property and provide a maximum loan figure. We have a handy calculator on this site (click here) which will give you a rough idea as to what could be achieved. This is only to be used to give a ball park figures and your broker will be able to research the market for you to get you an accurate figure.
Mortgages to Purchase a Property
Mortgages to purchase a property a fee of £495 is payable on application – this is fully refundable if we are unable to obtain a mortgage offer.
Remortgages
For processing a remortgage a fee of £295 is payable on application – this is fully refundable if we are unable to obtain a mortgage offer.
Rate Switch / Product Transfer
For processing a product transfer/rate switch where you are remaining with your current lender a fee of £145 is payable on application.
Adverse Credit
For applications where there is a history of adverse credit then a total fee of £495 will be charged, of which £245 is payable at the point a personal recommendation is made, whether you decide to proceed or not. The remaining £250 is payable if/when an application is made and is refundable if we are unable to obtain a mortgage offer.
Equity Release Mortgages
A total fee of £990 will be charged, of which £495 is payable at the point an application is made with a provider. The remaining £495 is payable if/when the application completes.
We can accept payment via bank transfer, credit/debit card via PayPal.
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