How your home can help

Have you ever stopped to think about Equity Release but been unsure what it entails? Equity Release experts, Harris Begley Financial Planning, help to dispel the myths.

When you’re thinking about planning for your retirement, it’s important to take a look at the whole of your finances, not just your pension, to see if you’re on course for the kind of retirement you’d want for yourself. Equity Release was regulated in 2007 and has come a long way in ten years, helping people who are asset-rich to have the freedom to make lifestyle choices they may not have been able to afford otherwise.

Designed for people aged 55 and above, Lifetime Mortgages (the name for Equity Release plans regulated by the government) allow you to release capital from your home whilst still maintaining ownership.

A Lifetime Mortgage comes with a ‘No Negative Equity Guarantee’ that means you will never owe more than the value of your home. Only when your property is no longer your main residence is it sold, at which point the proceeds of the sale are used to pay off the loan and any accrued interest. Any remaining proceeds are then paid to you or your heirs. Should there be a deficit between the sale price and the loan amount then any remaining balance is written off.

Even if you have an outstanding standard mortgage you can still release equity as long as the funds, and/or your savings, can pay off your existing mortgage. You can also choose not to make monthly payments on a Lifetime Mortgage, so increasing your financial freedom. The interest you choose not to pay is simply added to the total you owe and paid when the property is sold. You should bear in mind that a lifetime mortgage is just that, a lifetime commitment and the costs involved, plus the amount you release, will reduce the inheritance you leave. However it may be possible to guarantee that a share of the proceeds from the eventual sale of the property will always be paid to you or your estate. If you would like to find out how your home could help you in your retirement then it makes sense to talk to a specialist who can help you make the right decision for your future. 

Equity Release checklist

• You would still be the owner of your home with a lifetime mortgage.

• You may be able to unlock some of the cash tied up in your home with a lifetime mortgage.

• You could use the money released for almost anything you like.

• There are no monthly repayments.

• Interest is added each year to the loan and to any interest previously added to it. This can quickly increase the amount owed.

• The loan and interest are repaid, usually from the sale of your home, when you die or go into long term care, subject to the terms and conditions of the provider.

For advice on Equity Release contact Steve Rusga, Equity Release Specialist at Harris Begley Financial Planning on steve@harrisbegley.co.uk

You may also require advice on the legal and tax issues.

HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.

The value of pensions and investments can fall as well as rise. You may get back less than you invested.