Equity release can be a fantastic option for many homeowners. When looking for different plans, there are several factors you must consider and things you need to know to choose the perfect option for your specific needs. At Bespoke Home Finance we have put together this blog to better explain equity release. We offer informative and tailored advice regarding what equity release is and which plan is right for you. Our aim is to provide you with a reliable service that is tailored to your needs.
Lifetime Mortgages or Home Reversions
When choosing your equity release plan, there are two options available to you, lifetime mortgages or home reversions. Lifetime mortgages are the most popular option and are available for all homeowners over the age of 55. With a lifetime mortgage, you will borrow money against the value of your home with a fixed or capped interest rate. Whilst some plans give you the option of monthly repayments, this plan will mean your interest builds up for repayment.
To be able to take out a home reversion plan, you must be over the age of 60. For this to work, a provider will pay for part of your home at below market value. You can continue to live in the home rent-free, however, you will not own the entire property. When the property is sold, proceeds of the sale are split based on the percentage you and the lender own. If you sell 40% of your property, then when the property is sold, your lender will receive 40% of what the property is sold for.
Lifetime mortgages tend to be the popular choice as, although the interest will build up to be repaid at the end of the plan, you receive the full amount of what your home is sold for, before making repayments. With a home reversion, it means you could lose money if your property value increases between when you select the plan and when you sell the home. With both schemes, you can stay in the home, rent-free. The plan will come to an end when you and your partner pass away or move into long term care. When choosing either plan our team will take you through the pros and cons of each option. We don’t leave anything out at aim to find the perfect option for you and your family.
What Are The Risks Of Equity Release?
In recent years plans and providers are available, which means finding a suitable and safe equity plan is much easier. All plans that we advise on are approved by us at Bespoke Home Finance. However, there are still some risks to equity release, meaning it is important to seek professional advice first. This will ensure you choose the option that is right for you and not just the provider.
Your equity release plan will end when you and your partner either pass away or move out, this means early repayments could be possible if this occurs sooner than expected. If you are required to make an early repayment, it could lead to an additional fee, meaning you would have been better off without releasing equity. With a range of plans available, it means you can find a plan that is tailored to your specific needs. Each plan will have different criteria. This can include the option for features such as moving home, making early repayments or monthly repayments and therefore your plan becomes less risky, which is ideal for most homeowners. If you would like to discuss these options further, then make sure to speak to us today.
Are You Eligible?
Before releasing equity on your home, it is also important to make sure you are eligible for equity release plans. There are several requirements you must meet to be eligible for lifetime mortgages or home reversion equity plans. This includes:
- Property Must Be In Reasonable Condition & Over a Certain Value
- How Much Outstanding Debt You Have On Loans or Existing Mortgages
- Own A Property In The UK
- Depending on the plans you are interested in, there could also be several other conditions that must be met. Alternatively, you may only have to meet small criteria.
- Whether You Have Any Dependants Living With You
- You (or Both of You) Must Be Aged 55 or Over for a Lifetime Mortgage
- You (or Both of You) Must Be Aged 60 or Over for a Home Reversion
Contact Bespoke Home Finance
For more information regarding equity release and what you need to know, contact Bespoke Home Finance Today! If you are looking for equity release advisors who are trustworthy and provide professional advice to guide you every step of the way, then look no further than Bespoke Home Finance. Call us today on …… or fill in a contact form below.
