An insight into Equity Release for over 55s

Releasing equity could be a viable solution for enhancing your financial situation, enabling you to live the retirement life you’ve envisioned. Perhaps, you're contemplating a once-in-a-lifetime vacation or have vital home renovation projects in mind? Continue reading to learn more about equity release.

Did you know that a lifetime mortgage, the most sought-after equity release plan, allows you to maintain full ownership of your beloved home?

The funds you release are completely tax-exempt, and you have the liberty to decide how you'd like to access these funds – be it as a one-time lump sum or as frequent smaller amounts.

Furthermore, some equity release plans exempt you from making regular repayments. Therefore, once you have cleared any existing mortgage, a prerequisite for equity release, you could potentially lessen your monthly expenses.

Understanding how equity release works:

Upon your passing or if you transition into long-term care, your property gets sold. The loan, along with accumulated interest, is then cleared with the remaining funds going to your estate. As interest accumulates, it can add up to a considerable portion of the property’s value when sold, as it accrues along with the principal. This means your equity gets diminished. However, some plans nowadays permit the interest or a portion of the loan to be repaid earlier to reduce costs.

Are you eligible?

If you’re a homeowner aged 55 or over, and your property is valued at over £70,000, you may qualify for equity release. Each lender possesses unique qualifying criteria based on your personal circumstances. Hence, it’s crucial to consult with an equity release specialist to confirm your eligibility and how much you could potentially release.

The amount you can release is influenced by factors such as your age, your property's value, as well as your health and lifestyle. Certain lenders offer medically enhanced plans if you have specific health conditions, making you eligible for certain plans and rates.

The significance of professional advice:

When considering equity release, it's vital that you seek advice. A specialist broker can help you understand all the available options, including potential implications on the size of your estate over time, as equity release will decrease this. It can also impact your current and future entitlement to means-tested benefits. Equity release may involve a home reversion plan or lifetime mortgage, both of which are secured against your property and may decrease the value of your estate and affect funding for long-term care. It is recommended to ask for a personalised illustration to understand the features and risks.

Protecting your heirs:

If equity release is on your radar, it's essential to involve your family in the discussion as it will affect the inheritance you can leave behind. Certain equity release plans allow you to earmark a part of your property's future value to ensure an inheritance for your family.

Moreover, a no negative equity guarantee ensures that the total money borrowed against your property's value, plus any compounded interest, will never exceed the property's value. Any remaining loan would be waived off. Therefore, your estate will never be liable for more than what your property is worth when it is sold.

At DS Mortgages we offer both RIO mortgages and lifetime mortgages on a referral basis only via our trusted partners Viva Retirement Solutions and their team of experienced equity release and later life lending advisors.

A lifetime mortgage is a long term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate