As we get older, many of us find that the money we have has to stretch further; whether it’s contributing towards a child studying at university, or helping a relative get their foot on the property ladder, life can throw expenses at us at seemingly the most inopportune time.
But what happens when money is needed and the biggest investment you have is your house? This is where equity release may come into play.
What is equity release?
Put simply, it is the term given to a range of products that let you access the equity (cash) tied up in your house if you are over 55. Typically, you can take the money out as either a lump sum, or in some schemes, several smaller installments.
What are the main equity release options?
The 2 main types are a lifetime mortgage and home reversion.
The first option lets you take out a mortgage where you don’t make any repayments while you’re alive – interest is added to the loan, and the loan amount and interest are re-paid when you die, move house or move into long term care.
You may also be able to take out an interest only option – you should check with a qualified consultant who will be able to advise you further.
The second type involves selling all or part of your house to a home reversion provider in return for a lump sum or regular payments. You may live in the property until death but have to maintain and insure it.
Is this a suitable option for everyone?
No. While equity release may be tempting for those in need of releasing much needed funds, there may be several quite substantial caveats.
Some of these include leaving less to your family when you die, the potentially adverse effect on your entitlement to state benefits, and the complicated nature of the schemes making it harder to move house in the future. It can also be expensive too, so it’s important that you fully understand the implications.
The drawbacks listed above are not exhaustive and it is vital that you receive professional consultation on this matter. Clayton Holmes Naisbitt prides itself on giving independent, unbiased advice and would be delighted to hear from you if have any questions regarding this area of financial planning.
Call our office on 0113 3878240 to arrange a free initial consultation today.
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