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Equity release is where people, usually over the age of 60, release some or all of the equity value in their property to make home improvements, increase income or spend it as they wish.

Equity Release Advice from the Financial Adviser of the Year.

1. Equity Release Assessment

Equity release is a daunting prospect and many of us are worried whether it is a good or bad thing.

Remove your concerns - let the experts talk you through the process.  Our equity release experts will:

  • Offer a free equity release suitability assessment
  • Explain, in plain English the positives and negatives of equity release
  • Explain the different types of scheme
  • Talk, confidentially, to you about your needs, requirements and worries
  • Assess whether you are suitable
  • Assess whether your property is suitable
  • Tell you how much you are likely to release
  • Explain the process
  • Explain the costs
  • Give you a frank and honest opinion of equity release for you circumstances
  • Do this in a free consultation, contact us now

Why is the suitability assessment free?

  • This is one of the biggest financial decisions you make in retirement.
  • It is too important to get it wrong and is a decision that should be made without pressure and without profit on either side.
  • Our award winning advisers are not commission based. 
  • Our experts all have special equity release, lifetime mortgage and home reversion scheme qualifications.
  • We will only take you on for equity release if both you and us are completely satisfied that it is right for you.
  • We are liable for the advice that we give so we will leave no stone unturned for you.
  • If you are happy, we will are then moved ahead together, but only when you are 100% happy.

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2. Equity Release Amount? Free Suitability Assessment Safety First!

How much money could I receive for releasing equity?

Lifetime Mortgage (Interest Roll-up Scheme):

Lifetime Mortgage Equity release companies will usually allow

  • 60-70% of home value for people over age 70
  • 40-50% of home value for people aged 60+
  • 0-30% of home value for people between 55 - 60 years
  • It is never the full amount as the equity release firm must wait until you sell, move or sadly die

Home Reversion (Sell Share of Home Scheme)

  • Market value of your home or the share of your home will not be offered.
  • It depends upon the type of property: freehold, construction and how old you are
  • For example, 100% sale of your home would likely receive:
  • 40% - 45% of the value of your home for a 65 year old
  • 45% - 50% of the value of your home for a 70 year old
  • 50% - 55% of the value of your home for a 80 year old
  • 55% - 60% of the value of your home for a 90 year old
  • It is never the full amount as the equity release firm must wait until you sell, move or sadly die

Retirement Mortgage (Monthly Interest Payments)

  • Usually a multiple of your income
  • Usually only your free, excess income will be allowed
  • The sum will be based upon interest charged around.
  • Work on the basis of 3 X your yearly "free/excess" income to reach a lump figure.

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3. Cost of Equity Release

A simple list of costs that you may expect to incur when arranging an equity release scheme

Equity Release Company Fees

  • Survey Fee £300 to £500 (many lenders will offer this for free as part of the application
  • Application Fee - some lenders may ask for an upfront administration fee just to ensure you are serious

Legal Fees

  • This is like any other mortgage or property sale/purchase expect to pay between £500 and £1000 depending upon the value of your home. 
  • We can search our database for a low cost lawyer is you wish.  Contact us today.

Financial Adviser Fees

  • Equity release has to be advised on by a suitable qualified financial advisers.
  • Equity release is high risk advice and the adviser has a duty to protect you and make sure you get the right advice.
  • They are responsible for the advice that they give you.
  • Expact a fee of around £1200 - £1500. 
  • Many equity release firms allow some or all of your adviser fee to paid for from the equity release charges (this used to be known as a commission).  You can use this to offset against you adviser fee. 

In total, expect fees of around £2000-£2500.  You should be mindful of these costs when arranging an equity release scheme.

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4. Advantages & Disadvantages of Equity Release Schemes

  • Improving your quality of life
  • Improving your cashflow
  • Release money for large capital expenses
  • Increase income
  • Control
  • Spend money that may otherwise be means tested later for care fees
  • Spend money that may otherwise be suffer inheritance tax
  • Protected from negative equity if scheme is under Equity Release Council Rules
  • Flexibility to increase/drawdown more capital in future
  • Simple
  • Stay in your own home
  • Make home improvements
  • Protected by financial regulator
  • Protected by Financial Ombudsman Service
  • Only specially qualified financial advisers can advise you
  • Legal advice to protect you
  • Free to move home/downsize in future
  • Free to make financial gifts to family

Disadvantages of Equity Release

  • Maintaining your home is still your responsibility
  • You get reduced value and not full market value
  • Interest rates are higher than normal mortgage rates
  • If you do not spend the money released and leave ot in the bank you may suffer reduced income support or council tax assistance benefits
  • The longer you live, the greater the financial loss
  • For Home Reversion, you lose future growth in the value of your home and there is no going back

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5. Is My Home Safe With Equity ReleaseEquity Release Alternatives

Worried about being made to move out of your home or losing it?

Basic Equity Release Advice Rules to follow:

  • We are independent financial advisers fully authorised by the financial regulator in the UK
  • We have full professional insurance
  • We have special equity release qualifications set by the Chartered Insurance Institute
  • You should only use reputable advisers

We only recommend ERC registered equity release schemes that have signed up to the ERC code of practice:

Meaning:

  • You have a no negative equity guarantee
  • You can never be moved out of your home
  • You will not lose your home
  • Your are in control

You and your home are safe with equity release provided you only take advice from a reputable firm.  Contact us today for help.

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6. Involve The Family in Equity Release

  • You are an adult
  • You have managed your financial affairs all your life
  • You did not "lose your marbles" when you turned age 60

Why do you need help now?

The simple answer is you do not need to get the family or friends involved, it is your money and your home after all.

We just think it is wise with such a big decision to consider talking with your family or friends.

They may help, they may have an alternative view.

When making large decisions it is usually always in your interests to get as wide a view as you can beforehand.

If in doubt, talk to our expert team, confidentially and we will help you.

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7. Equity Release Property

Not all properties are suitable for equity release.

Below is a list of what is usually acceptable and not.  This is not an exclusive list, some equity release lenders have different criteria.

  • House
  • Bungalows
  • Flats
  • Good repair
  • Freehold
  • Leasehold (if long lease say 90 years plus)
  • Property owned by you
  • Minimum value say £70,000

Not acceptable

Property outside the above criteria may not qualify for equity release, but contact us as we are sure we will find a solution for you.

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8. Equity Release Legal Advice

Equity release is a big decision and in many cases a "no going back" decision.

As such, rules in place that you must be protected and have all the advantages and disadvantages of equity release explained to you before going ahead.

We as you financial adviser will complete a comprehensive consultation and advice process to ensure you fully understand what you are entering into.

As equity release is a charge or sale of a share of a property, you will also need a solicitor.

Your solicitor is also required at length to explain the plus and minus points of equity release and then sign a certificate to confirm they are hapy that you understand equity release and what you are doing.

Many solicitors do not offer equity release legal advice.  We can help you find a solicitor that specialises in equity release.

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9. Equity Release or Downsize.Equity Release Downsizing

When giving equity release advice we always have a list of priorities on whether equity release is suitable.  These are:

  • Consider selling the property and downsizing to release equity.
  • Consider alternative financial borrowing or is there are grant available if you are planning home improvements.
  • Consider borrowing from family or selling to family.

Downsizing

When looking at equity release, you should always consider selling and downsizing.

  • Do you want to stay in the home?
  • Do you have an emotional attachment to the home?
  • When you are older will you be able to look after the home and garden?
  • If a house, when you are older, will you be able to use the upper floors?

Answer all these questions when making a decision to equity release.  It just may be that downsizing is a more suitable option for you.

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10. The effect of Equity Release on State Benefits

Below State Pension Age Benefits Not Affected

  • Carer’s Allowance
  • Child Benefit
  • Personal Independence Payment (fomerly DLA)
  • Employment and Support Allowance (ESA) - formerly Incapacity Benefit

Below State Pension Age Benefits That Could Be Affected

  • Council Tax Support
  • Health Benefits: eye tests, glasses, dental and prescriptions, school meals, vitamins and milk
  • Employment and Support Allowance

Above State Pension Age Benefits Not Affected

  • Attendance Allowance
  • Carer’s Allowance
  • State Pension

Above State Pension Age Benefits That Could Be Affected

  • Council Tax Support
  • Health Benefits: eye tests, glasses, dental and prescriptions
  • Pension Credit

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11. Equity Release When In Care Home - What happens if you need care

Care At Home

  • If you need care at home, then your equity release scheme will continue.  Nothing has changed and you are still free to stay.

Moving into a care home temporarily for respite (i.e. give your carers a break).

  • As above, your equity release scheme will continue. Nothing has changed and you are still free to go back home.

Moving to a care home permanently

  • Usually the equity release lender would expect your or your family to now sell the property.
  • Unless, the equity release was done in joint names and somebody else is still living there in which case the equity release scheme will continue.

If you need help with care fees planning or equity release and care, contact us

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12. Equity Release on Death

What happens when you die and have equity release

  • Usually the equity release lender would expect your or your family to now sell your property.
  • Unless, the equity release was done in joint names and somebody else is still living there.
  • If a lifetime mortgage, the debt to the equity release company will be settled first, the balance payable to the estate.
  • If a home reversion scheme, the property sale proceeds will be distributed based upon the % shared owned of the property.

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13. The Equity Release Council.

Formerly known as Safe Home Income Plans (SHIP)

What is the Equity Release Council?


Started in May 2012 and replacing SHIP (Safe Home Income Plans set up 1991), the Equity Release Council, ERC for short, the council was set up 1991 and represents the leading providers of Equity Release plans. 

ERC members have agreed to a code of practice and guarantees to protect clients.

  • Clear and transparent documents
  • Clear and transparent charges
  • A no negative equity guarantee
  • A permanent right of occupation whilst you are living there, in short you cannot be asked to leave your home.
  • Your solicitor will also sign an ERC certificate confirming that the equity release scheme, it advantages and disadvantages have been explained to you.
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