We understand you may have lots of questions about releasing equity from what is likely to be your largest asset, your home.
With a Lifetime Mortgage, you have to be aged 55 years or more. If you are one half of a couple, it is the age of the youngest half that counts towards this requirement.
With an equity release plan, you can’t have a mortgage or any other loan secured on the property at the same time. Many people take out an equity release plan in order to clear any existing mortgage from their property – and with it the stress that comes with having to make those monthly mortgage payments.
This decision is completely up to you and your personal circumstances. You can choose to allow interest to accumulate, then change your mind and repay adhoc repayments. In some cases you can repay up to 10% of the amount your borrowed every year.
Example 1 – If you borrow £25,000. You can make £2,500 repayments every year without early repayment charges.
Example 2 – If you borrow £100,000. You can make £10,000 repayments every year without early repayment charges.
Example 3 – if you borrow £500,000. You can make £50,000 repayments every year without early repayment charges.
You can choose to stop or start making adhoc repayments to your plan throughout the lifetime of the plan.
If you simply want a plan making monthly interest payments then we will review your income & affordability and recommend whether this option be suitable for you.
You are guaranteed to never owe more than the value of your property, so your heirs will not inherit a debt that your estate can’t cover.
You can also protect a part of your estate against the accumulation of interest. Please speak with your recommended advisor regarding this feature.
When you pass away or go into full time care, the lender typically allows 12 months for the heirs to sell the estate without interference. Your heirs could even choose to repay the loan amount from their own assets, if they would prefer to keep the property in the family.
We do not charge an advice fee unless you proceed ahead with our recommendations and release your equity. Our advice fee is currently £995. Other fees vary from case to case, but charges can include: a valuation fee of your property, and any solicitors fees.
Authority (FSA ) now the Financial Conduct Authority (FCA) regulated the equity release market in 2007. Below is a brief history of how equity release market has developed since the mid 60’s.
- First plans were released in 1965.
- The 1980s and 90’s were the troubled years for Home Improvement Plans. Rising interest rates plus falling house prices resulted in negative equity for some.
- The need for consumer protection led to the formation of Safe Home Income Plans (SHIP) in 1991, which set down various product safeguards, such as the “no negative equity guarantee”, meaning the customer will never owe more than their home is worth and no debt will ever be left to the estate.
- In 2012 SHIP was re-launched as the Equity Release Council, broadening its membership from providers only, to include; advisers, solicitors and surveyors ensuring equity release products continued to be safe and reliable for consumers. Lifemortgage as members of the Equity Release Council must offer products and services which conform to the best practices of the sector, meaning customers like you are kept are fully informed and increasingly protected.
- 2000’s: With a changing market and FSA (now FCA) improves regulations, more SHIP products became available to the consumer, providing a safe and easy way to release equity from their homes.
- £1,38 billion of equity release loans were made in 2014 – this was the largest amount of equity release lending ever recorded by 2020 the market is expected to reach £9 Billion !!*
- 77% of home owners believe their home is their biggest financial asset in retirement (research carried out in December 2013 with 1511 homeowners aged 55 and over)*
- Over 60’s have nearly £1.3 trillion of equity in their houses (Top of the Ladder Housing report by DEMOS)
* Source: Equity Release Council