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What is Equity Release?

The value of your home, less any mortgage is known as ‘equity’. Equity Release is the name given to a range of financial products that convert a proportion of that equity into cash for your own use.

Equity Release Plans usually have the following common factors:

  • Equity Release has a minimum age of 55.
  • You receive a guaranteed tax-free cash sum or income for life.
  • You continue to live in your home for as long as you wish.
  • There are no repayments required until your home is sold. This is normally after your death or entering long term care.
  • You have the freedom to move to a suitable property should you wish to do so in the future and transfer your equity release plan to your new home.
  • Your estate will not be liable for any debt beyond the property value regardless of future house prices.

Is Equity Release Right For You?

Before considering equity release you should ask yourself if you are are you prepared to use the value locked up in your home and to consider the alternatives to equity release.

There are 4 main alternatives:

  • Move to a less expensive property and use the surplus funds to meet your income or capital needs.
  • Use any existing resources, such as investments.
  • Use assistance from family, grants or unclaimed State Benefits.
  • Do nothing and pass on the value of your home, less inheritance tax (40% on anything over £325,000 in 2014-15)

Having considered the alternatives, the next question is whether have you gathered sufficient information to enable you to make a decision that you and your family, are happy with?

If you’ve got this far you may well ask yourself why you didn’t do this sooner. Whilst equity release can provide priceless benefits for many in retirement, it is not suitable for everyone. Is some cases there can be drawbacks which outweigh the benefits. Get impartial advice.

Obtaining impartial advice from a specialist equity release such as Lakeview Financial Services is crucial if you are to make a decision on the right scheme and avoid making a mistake that you may regret for life.

Types of Plans Available

At any one time, there are over many equity release plans available in the market offered by reputable equity release providers.

They can be broken down into 3 main types:

  • Lifetime Mortgages
  • Drawdown Plans
  • Home Reversion Plans

Each of the above is simply a different method of releasing the equity locked up in your home. There are also other useful features available.

Protected Equity

All equity release plans that we recommend come with a no-negative equity guarantee, however some plans allow you to go further and protect a fixed share of the value of your home. For example, if you protected a 20% share in your home, you have a guarantee that a minimum of 20% of your property value is protected for you or as inheritance for your beneficiaries in the future.

Impaired Life

Some providers will allow you to release more capital if you suffer from one of a list of health conditions.

Flexible Drawdown

New plans are available with a pre-agreed ‘cash reserve’. Similar to an overdraft, it is a facility that allows you to draw-down cash whenever you wish, if you wish to. Ideal for boosting income when required or for ad hoc purchases when they’re needed such as a new car, replacement boiler and so on.

As interest is only added to the amount drawn out, they can work out much cheaper than other types of plans, depending on your needs.

Other Points to Consider

Equity release plans can provide many benefits in retirement. However, equity release is not suitable for everyone and you should consider the alternatives first. For a full list of alternatives that should be considered first, please contact us.

We also recommend you involve other family members as much as possible. We will be happy to discuss our recommendations with other members of your family so that the everyone understands the benefits, features and any risks.

Equity release plans will affect the value of your estate. In some cases, taking out an equity release plan will also affect any State Benefits you receive. For these reasons, take advice from a specialist adviser first to ensure that you do not end up regretting your choice.

We offer a full advice and recommendation service. We offer a free of charge, no-obligation, initial consultation with an independent specialist adviser so that you can find out how much cash you could release and whether a plan would be suitable for you. We will only charge a fee for our service if your equity release plan competes and can be paid from the capital released to you.


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