What is Equity Release?
Equity release allows you to convert some of the equity in your property into a tax-free cash lump sum or a regular income without you having to sell your property and move, and without the need to make any monthly payments.
Will I have to make monthly payments?
No, unless you choose an interest only lifetime mortgage. Interest only lifetime mortgage plans may suit you if you have a regular source of income and can therefore afford to pay interest on a monthly basis. The benefit of this is that the amount of the loan does not increase. It may be possible to pay all of the interest or a proportion dependent on what you can afford.
To discuss interest repayment options ask ERIC on 0800 077 6885.
Can I use the money for anything I want?
Yes, as long as it’s legal! Most of our clients use the money to pay off outstanding debts and mortgages, make home improvements, buy holidays, cars, help family, or simply to make life a bit more comfortable.
How much money can I raise?
This is dependent on your age and the value of your property and varies between different products. The minimum loan is generally £10,000 and you need to be able to raise enough to pay off any outstanding mortgage plus any other loans secured on the property.
To find out how much you could raise ask ERIC on 0800 077 6885.
Can I live in my home for the rest of my life?
Yes, you and anyone else named on the agreement have security for life.
How long does it take to get the money?
It can be as little as 3 or 4 weeks once we have received your application, but normally takes 6 to 8 weeks. If there are complications or if your solicitor is not familiar with Equity Release it may take longer. We will keep you updated at every stage of the process.
What’s your best interest rate on a lifetime mortgage at the moment?
Interest rates vary between the different plans and lenders. Like a conventional mortgage these change frequently. Usually rates will be slightly higher than conventional mortgages but this is because they’re fixed for the life of the plan.
Can I do Equity Release if I have a mortgage?
Yes. As long as we can raise enough money on the Equity Release plan to pay off the mortgage and any other loans secured on the property.
What fees are payable upfront?
At ERIC we don’t charge any upfront fees and you are under no obligation to proceed at any stage of the process. If you do apply for a plan you will need to pay for the valuation on your property, usually between £200 and £300. Some plans may include a free valuation.
All other fees will be taken out of the amount released. The Equity Release Information Centre typically charge a fee of 1.5% which is payable only if your equity release plan completes, with a minimum fee of £945. For example, a fee of £945 would be required if a plan of £50,000 was released, for a plan of £100,000 a fee of £1,500 would be required.
How much will it cost me to set up?
Set-up fees will vary depending on the chosen plan. There is normally an application fee, an advice fee, a valuation fee and the solicitor’s fees to consider. Most of this will be subtracted from the amount released so that there is very little you will have to pay upfront. Some plans may offer special discounts, cashbacks, free valuations or help with legal fees; your advisor will explain the options available to you.
Can I lose my house? Will it ever be repossessed?
No. Both Home Reversions and Lifetime Mortgages have safeguards. If you take out a home reversion you have guaranteed lifetime occupancy under the lease agreement and a copy is registered at HM Land Registry. Provided you comply with the terms of the agreement, you and anyone else named in the agreement has guaranteed occupancy for the full term of the lease.
If you have a lifetime mortgage and even if the total amount of the loan plus any interest exceeds the property’s value your house cannot be repossessed as long as you have maintained it and complied with the mortgage agreement.
Can I move?
You can move at any time with a lifetime mortgage. With some lenders you can transfer the loan to your new property or you can repay the loan from the sale proceeds. As long as it’s suitable security, you then start a new loan which is secured on your new property.
However, you should bear in mind that these plans are intended to be long-term and if you move, the loan may have to be repaid with any early redemption charges and fees. The lease agreement from reversion providers usually include a clause that allows you to move provided that the alternative property is suitable security. Each company has different conditions so you should check these before you go ahead with the plan.
If I die, can my partner still live in the property?
Yes. Anyone named on the lease agreement or mortgage has the legal right to continue to live in the property until they voluntarily decide to leave it or until their death.
What other considerations should I make when planning ahead?
ERIC work in partnership with Beneficial Trust & Will Co Ltd to provide services in support of you getting your affairs in order. This may include making your Will and Lasting Powers of Attorney to ensure the right people are appointed to manage your affairs should you become unable to.
For a free no obligation consultation, call 0800 077 6885 or email email@example.com