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Frequently Asked Questions |
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Q: What is Equity Release?
A: Equity release is a way of releasing some of the money from your home, providing you with a cash lump sum, income or both.
You can continue to live in your home and use the money how you wish. Whether it's for a new car, home improvements, a special holiday or simply to top up your income, it's up to you how you spend it.
Taking a lump sum, plus the costs, will reduce the value you have in your home, and therefore the value of any inheritance you leave. Your entitlement to tax and welfare benefits may also be affected. We will discuss this with you.
Q: Are you eligible for an Equity Release Plan?
A: If you are a homeowner aged over 55. The type of plan available to you and the amount you can release will depend upon your age, gender and property value. Minimum property types also apply.
Q: Does your home qualify?
A: Your home may qualify if it is a residential property of standard construction in the UK.
Please bear in mind that minimum property values apply. We are not able to offer equity release for properties in the Isle of Man or the Channel Islands.
Q: How much equity can I release?
A: The amount you can borrow through a lifetime mortgage is based on the value of your home and your age when you start the plan.
With a home reversion plan, you can choose to sell up to 100% of your home. However, because you can still live in your home rent–free until you die or go into long–term care, you'll receive less than the full market value of the share of your property that you sell.
We will ensure you choose the right plan for you.
Q: Will I still own my own home?
A: Both types of equity release plans offered allow you to continue living in your home until you die or need to go into long–term care. The lifetime mortgage allows you to keep ownership of your home. With the home reversion plan, the ownership of your home is transferred to the reversion provider.
Q: How flexible are Equity Release Plans?
A: With a lifetime mortgage you may be able to release more in the future, depending on the lending criteria at the time.
With a home reversion plan, if you sell less than 100% of your home to the reversion provider, they will guarantee to buy further shares from you as long as you meet the conditions of the plan.
Q: Are there valuation and legal fees to pay?
A: We have access to beneficial products that on occasion provide a free valuation and or no lender arrangement fee.
When a valuation fee is incurred, the size of the fee will depend on your property value. For example, with a property value of £100,000 you would expect to pay between £100 and £170
Other costs are dependent on your choice of equity release plan and the value of the funds you wish to release.
Lender Fees - includes application fees, arrangement fees and completion fees and all the administration charges that are incurred at each stage in the process
Typically Lender Fees range between £300 and £700. It is possible to add this fee to the value of your loan.
Solicitors' Fees
The cost of these fees is dependent on the Solicitor that is employed. Solicitors who specialise in Equity Release tend to be slightly cheaper. You can expect to pay between £350 and £500 for this service.
Q: What interest rate will be applied?
A: lifetime mortgage has a higher interest rate applied to it than a standard mortgage, because you don't make any payments during the term of the mortgage. You can find out more about the current interest rates and APRs for each of our lifetime mortgages by talking to one of our specialist advisers.
There aren't any interest rates with a home reversion plan because it's not a loan – you sell all or part of your property at the outset of the plan to release the capital. One of our advisers will be able to help you decide which plan best suits your personal circumstances.
Q: Are you still responsible for maintaining the property and paying bills?
A: Yes, the equity release plans require you to maintain your property and keep it in a good state of repair. It's also still your responsibility to insure your property and pay all your property–related bills, such as utilities and council tax.
Q: How can I be sure it’s right for me?
A: With the choice of equity release plans, we aim to offer you a solution that fits your personal circumstances. Even so, we recognise that equity release isn't for everyone. So, we'll take the time to listen to your needs and concerns and if we think it's not right for you, we'll tell you.
Q: What if I decide to move home?
A: All Equity Release schemes recommended by us allow you to move, providing you want to move to a normally constructed property located somewhere in the UK and it is Freehold or Leasehold with sufficient remaining years left on the lease. If you move to a property that is smaller, it is likely that you will be asked to repay a proportion of the original loan; this cash is usually obtained from the profit you will receive on moving to a smaller property. This prevents your lifetime mortgage loan from representing a larger percentage of your new property, keeping your loan in proportion to your new home.
Q: How is my loan repaid and what would be left for my family?
A: Life time Mortgages - As you do not sell any legal ownership, it remains for your representatives to arrange the sale of the property and pay the loan and interest back to the lender, retaining the balance. As interest is due until such time as the debt is repaid, it is in their interest to try and obtain the best possible price as quickly as possible.
Home Reversion plans - If you sell 100% of the ownership to a company, the provider will arrange the sale of the property. If you sell less than 100% the majority of companies will arrange the sale. You or your estate will still receive the proportion of the home's value (minus costs) you originally chose to retain.
Q: Can I repay my loan early?
A: Yes – if a Lifetime Mortgage scheme. A Lifetime Mortgage Scheme can generally be repaid at anytime however there may be early repayment charges applied. Some lenders charge a fee for the first 5 or 10 years, whereas others are based on Gilts and apply for the term of the loan.
Under an interest only mortgage the loan can generally be repaid at any time, if however you choose a fixed or discounted rate then there is usually a redemption penalty for early repayment during the chosen initial period.
With a Home Reversion Plan repaying the loan is difficult as you would have to buy back the share sold for the full market value at the time of repayment, this can be very expensive and should not be seen as a short term commitment.
Q: What happens if I apply with my partner and one of us moves into long term care or dies?
A: An Equity Release plan recommended by us gives both applicants the legal right to live in the property until they voluntarily decide to leave or until their death
Q: How safe is Equity Release:
A: Before you enter into an equity release plan it is important that you are aware of all of the implications. Our team of specialist advisers will fully discuss with you all options available.
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