Equity Release

WHAT IS EQUITY RELEASE?

Equity Release allows homeowners who are over the age of 55 to release tax-free cash from the value of their home, without the need to sell the property, allowing them to continue living in their home. The amount you can release is based on your age and how much your home is worth and is not linked to your annual income, unlike standard mortgages.

You can release the equity in your home as one lump sum or as a series of smaller lump sums, called drawdowns, depending on what equity release product is chosen.

Unlike a traditional mortgage, Equity Release – also called a Lifetime Mortgage – does not require monthly payments. The interest charged by the lender is added on to the loan and increases the amount you owe on a compound basis. This is also known as rolled-up interest.

That said, you can make payments towards the loan within the limits set out by each provider (usually 10% annually of the original amount borrowed) in order to offset the interest charged eroding the equity remaining in the property.

The loan is usually repaid from the sale of your house when you die or go into long-term care. For couples, this is when the last spouse or partner goes into long-term care or passes away. Meaning, if your partner were to go into care or pass away, you can still continue living in your home.

WHY CHOOSE EQUITY RELEASE?

People choose Equity Release for a variety of reasons, however, the most common are:

  • Home Improvements including adapting your home so you can continue to live in it independently.
  • Pay off an outstanding mortgage. This is typically an interest-only mortgage coming to the end of its term, where the original lender requires full repayment of the loan, or where the monthly mortgage payments have increased due to recent interest rate increases, eating into disposable income and making it harder to pay other bills & enjoy life.
  • Paying for private medical treatment, especially recently where the NHS wait times for non-urgent procedures are months, even years long.
  • Gifting children or grandchildren lump sums to help with their own house purchase or other major events i.e. weddings. Essentially gifting them their inheritance early.
  • Managing your estate, wealth & tax planning, and leaving a living inheritance.
  • To pay for one-off ‘luxury’ items like a special holiday or new car/caravan
  • Top up your regular retirement income.

FAQ: CAN I LOSE MY HOUSE?

There are no contractual monthly payments with Equity Release mortgages, therefore there is no risk of losing your home as you cannot fall behind on payments. You are guaranteed to be allowed to live in your home until you pass away or go into long-term care.

FAQ: WHAT ABOUT MY CHILDREN’S INHERITANCE?

Many clients are concerned that taking out a Lifetime Mortgage will mean that they don’t leave an inheritance for their children. If this is a concern, we offer Equity Release mortgages that guarantee that a percentage of your home is protected for inheritance planning, giving you the security that there will be a legacy for you to leave for your loved ones.

FAQ: WHAT IF I WANT TO MOVE HOME?

Equity Release mortgages are portable, which means if you want to sell your home and buy another one you can transfer the Lifetime mortgage onto the new property. This is subject to the new property meeting the Equity Release provider’s criteria.

FAQ: WHAT IF MY HOME IS WORTH LESS THAN THE AMOUNT OWED? I DON’T WANT TO LEAVE MY CHILDREN WITH DEBT.

We only recommend Lifetime Mortgages that have a no negative equity guarantee. What this means is that, when the last surviving spouse/partner dies or leaves the house permanently to enter long-term care, the amount to be repaid to the lender won’t exceed the sale proceeds of the house.

Of course, the house needs to be sold at ‘fair market value’ for this to apply – it can’t be sold to a friend on the cheap to cheat the system, but the no negative equity guarantee does offer very valuable protection and peace of mind for those considering Equity Release.

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Willowgate Finance Ltd is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorsed and regulated by the Financial Conduct Authority.Registered Office: 2 Daniels Gate | Spalding | PE11 3QY. Registered Company number 12291842. Registered in England & Wales.

There may be a fee for arranging your mortgage. Typically the fee is £695, however the precise amount will depend on your circumstances and the level of work involved.

There is no charge for your initial consultation.

There is no fee for arranging your insurance policies.

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