As we get older we sometimes find our property wealth has grown however we have a need for additional income or savings. One way to access some cash from your home is with an equity release plan or Lifetime Mortgage which can provide the funds to make home improvements, repaying a mortgage or other loans, gifting money to family sometimes for purchasing property, or simply enjoying retirement, whilst continuing to live in your property.
Equity release can be a great option for some people, however it is a important financial decision which should never be taken without independent professional advice from a regulated adviser.
To help answer some vital questions with informed, accurate and balanced information we have provided some detail below.
Is Equity Release right for everyone?
There is no ‘one size fits all’ when it comes to any financial products such as equity release and what suits one person could be detrimental to another hence the bespoke service we provide.
At Bower Private Clients, we ensure that any decision you decide is the right one for your individual circumstances. We always suggest that our clients involve their family in any conversations and decisions, allowing for clear, honest and open communication about any impact to a family’s estate.
Our advisers will explore many options and may advise doing nothing because we are totally independent and we work for you.
What Are The Advantage and Disadvantages Of Equity Release?
Equity release is a safe option for taking wealth built up in your property to provide a source of income or cash lump sum to spend as you wish. This comes with some implications which is why it’s important to fully understand and comprehend all of the advantages and disadvantages of these Lifetime Mortgage plans.
The Advantages of Lifetime Mortgages
- You continue to live in your own home, rent free, for the rest of your life or until the last person moves into permanent residential care.
- The ‘no-negative equity guarantee’ means that you your estate will never owe more than the property is worth when it is sold and you will never have to repay more than the value of your home.
- The tax-free cash that you release can be used for home improvements, repaying a mortgage or other loans, gifting money to family or simply enjoying retirement, whilst continuing to live in your property.
- With some plans, there are no regular payments to make, the option to make repayments is yours.
- The flexibility of modern Lifetime Mortgage plans means that you can release the money as a lump sum, or a lump sum with a drawdown facility which means you only pay interest when you need the money.
The Disadvantages of Lifetime Mortgages
- The value of your estate will reduce and this means the amount you will have to pass on as inheritance to your estate will also decrease.
- Your entitlement to certain state benefits may be affected – we will advise you if may happen.
- If you wish to repay or end the plan early there may be financial penalties in doing so. Some products have greater flexibility than others in this regard.
- Some lifetime mortgages are paid back with compounded interest and no monthly repayments. This means that over the longer term, the amount you owe can grow significantly. Full details will be provided before you decide if this is an option.
- You should always consider the alternatives. We explore other options of releasing money from your home or sourcing money such as, downsizing, asking family for help or taking out a normal residential mortgage or unsecured loan.
Impartial Equity Release Advice You Can Trust
If, having read all those advantages and disadvantages, you would like to know more about a Lifetime Mortgage, please contact a Bower Private Client adviser today and our expert staff will be happy to answer any of your questions.
Our Private Client staff are here to help our clients make smart, safe, informed decisions by providing open, honest and impartial advice.