The Council of Mortgage Lenders has urged the Government to make sure that elderly people do not have their pension credits and council tax benefits reduced, because of income received from lifetime mortgages or home-reversion plans.
They believe that equity release income should be treated in the same way as Isa's, and not be declared. At present, there is a five year exemption period before equity release income affects benefits, but, after that time, any income over £6,000 a year could be a problem for home reversion customers who receive an income, or those who have capital left from a lump sum.
Our view
As equity release continues to increase in popularity, expect the five year exemption to go. In addition, we cannot see the Department for Work and pensions being able to verify exactly every pension redit claimant that their income was or was not from an equity release source.
This will be abused on both sides.
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