Are you over 55 and looking for additional income in retirement or perhaps looking to make home improvements or take your dream holiday? A simple option may be to unlock the value in your home by way of Lifetime Mortgage, aka Equity Release. Current interest rates are some of the cheapest the market has seen, and the flexibility of these products may surprise you. BUT, as with all financial matters, ensuring the product is right for you is crucial to avoid unnecessary cost and distress.
Historically there has been a stigma attached to this area of the market and people will regurgitate an equity release horror story they have heard in the local drinking establishment, or whilst in a doctor’s waiting room. This was, in part, due to the way in which this market was traditionally monitored and the lack of knowledge within the industry; as well as the proficiency at which bad news spreads. The Equity Release Council, launched in 1991, is an organisation that was put in place to combat mal-practice and protect the interests of homeowners looking to release funds from their home. It has led to a “safer”, more transparent market in which each member must adhere to the statement of principles in order to ‘fly the council’s flag’. In addition, the implementation of specific qualifications for advisers has increased the understanding and reduced the risk.
But what does this mean to you?
Traditionally the biggest, and most publicised, risk of Equity Release products was the negative equity trap. The narrative goes a little like this: Mrs Jones borrowed £40,000 against her home worth £150,000 but due to the interest roll-up now owes £170,000. Clearly sale of the house is unable to repay the sum due and the debt therefore causes financial strain; possibly affecting the beneficiaries of the estate. Simply put, this cannot happen any longer with a product provided by a member of the Equity Release Council; which incorporates the “No Negative Equity Guarantee”.
Equity Release may be a fantastic product for you, offering the benefits of access to additional monies, no requirement to make ongoing repayments and benefitting from the protections that are now afforded to the products. The monies can be used for any purpose and could therefore offer you the opportunity to make gifts during your lifetime and witness the benefits - perhaps you can help a grandchild on to the property ladder or take the family somewhere memorable. The house remains yours and the monies are yours to enjoy as you wish.
It’s important to evaluate all your options and to decide upon your goals and aims … a conversation over coffee and a biscuit with your local adviser can be really beneficial here. At SWLaw Investment & Financial Planning our initial meetings don’t cost a penny and are without obligation, so why not see what options are available to you and your family moving into 2020. Remember we also host a ‘drop-in clinic’ at The Watermark on the last Tuesday of each month.
If you have any questions or simply want to find out if equity release is right for you, please contact me by email on firstname.lastname@example.org or give us a call on 01752 205205. We’re here to help.
Mortgage Adviser at SWLaw Investment and Financial Planning Limited