For homeowners looking for additional income, capital to spend, or wishing to have a liquid rather than a real estate asset to facilitate long term planning, then Equity Release could very well be the answer. Almost everyone with an unmortgaged (or low loan to value mortgaged) property can access part of the cash value of their home by using an Equity Release Scheme (“ERS”).
Equity release is typically available to people who are over the age of 55, own their own home with a significant amount of equity, and either don’t have enough money or income for their needs, or want to realise capital for planning purposes. By releasing equity in the form of an ERS, a lifetime mortgage or home reversion plan, it enables the individual(s) to remain in their home and raise money for things such as:
to generate a capital lump sum.
to provide an additional income.
to provide lifetime gifts to relatives.
for home improvements.
for holiday home purchase.
to fund long term care.
to settle trusts.
for long term planning.
There are no affordability checks for an ERS and the loan is usually repaid when the house is sold following the last partners death or admission into long-term care. Use of an ERS has evolved over the past few years from a niche lending option for the elderly to become a competitive, mainstream later life planning option - a sector growing faster than any other in the mortgage industry.
Is equity release right for me?
Whilst there are benefits for people in this situation, equity release isn’t for everyone and the benefits need to be weighed up alongside drawbacks - entering into an ERS can:
impact on you being able to claim certain state benefits.
affect your personal tax position.
impact on local authority grants / other grants, e.g. for essential home improvements.
Advising on an ERS is regulated by the FCA and is a highly specialised area and for that reason Castle Estate Solutions has partnered with some of the UK’s leading financial services groups for those both in and approaching their retirement. So if this is something you might be interested in please contact us for a completely free and without obligation initial assessment of whether or not you qualify to consider an ERS. After taking full details of your situation, we will then refer you on to an appropriate specialist advisor if you qualify and wish to proceed with going into more detail.