In the current pandemic, the idea of borrowing against the value of your home may have come up in conversation. More of us are assessing our finances in these times of uncertainty. For those who are asset rich and income poor, equity release may be high on the agenda.
However, nine out of ten people aged 55 to 80 do not fully understand how equity release works, according to research by Sun Life. Many myths persist about equity release due to the fact that it is associated with unregulated products in the past. Now the industry is regulated by the FCA and in order to take out equity release, you must take specialist advice and meet the criteria. Our advisers can help you to assess whether or not it is an appropriate option for you. Read on to learn more about how equity release works.
Discuss your equity release options with an adviser
Borrowers can choose to pay nothing back until their property is sold, when they die or when they go into care. Interest can roll up or borrowers can choose to make interest payments. Lifetime Mortgages do not require the payment of interest or capital until the property is sold. Furthermore, the income of the borrower is not taken into account during the application process, unlike other mortgage products.
Your Access Equity Release adviser will not recommend equity release to you if it is unsuitable and of course, you may have other options. As explained by Jim Boyd, chief executive of the Equity Release Council, “A significant number of people start the process and decide it is not for them.” We agree with him that advice is focused and personalised: “No one should ever enter into a long-term obligation until they feel safe and comfortable and completely satisfied. If they are uncomfortable they should defer until they do feel comfortable.”
Your consultation with an adviser
The pandemic lockdowns have changed the way we work as face to face meetings have been affected. You can have a consultation with our advisers via video conference.
Remember to ask about the No Negative Equity Guarantee which means that borrowers will never owe more than the value of their home. Remember to also ask about the difference between a Lifetime Mortgage and a Home Conversion Plan as conversion plans mean the lender will own some or all of the property.
Equity release borrowers need to plan ahead but what if plans change? For example, what if you have released equity but want to move home? You can find out more here and discuss questions like this with your adviser.
As explained by David Burrowes, chairman of the ERC, it is useful to consider the equity in your property when you consider your later life finances and retirement income. “Retirement finances are increasingly squeezed as generous final salary pensions edge further to extinction. Many older households are already facing a situation where their expenses outweigh their disposable income.”
:: Use our Equity Release Calculator to work out how much cash you could release.
It is important to take expert advice on equity release before deciding whether it is right for you. Contact us to find out more from one of our highly trained advisers.
