You can use equity release lifetime mortgages for a range of things:
- releasing a cash sum
- paying off debts
- paying off your mortgage; particularly if it's interest only
- home improvements
- a regular income
- helping the family with some cash
- having a holiday
With so many uses it's not surprising to hear that the number of people of releasing equity from their own has risen again to a whopping £824m being released in 3 months, between July and September 2017 which is a 44% increase on the previous year.
It's an important decision
Taking out an equity release mortgage is a big decision and should not be taken lightly, in fact we always suggest that you do your homework by checking out equity release reviews to get familiar with your choices or speak to a company like Age Partnership who can recommend any equity release provider and plan in the market and give you advice on which scheme is more appropriate to match your needs.
Once you have a good understanding of how equity release mortgages work and are ready to take the next step we would suggest that you speak to your family. Share with them why you are considering releasing equity from your home and how this will help you have a more comfortable life style.
Whilst you may be concerned about what your children will think, after all you are potentially reducing their inheritance, it's far better to have the conversation now than to let them find out at a later date, perhaps even once you have passed away.
How do equity release mortgages work?
More details can be found on our specialist equity release section here, although in summary an equity release mortgage or lifetime mortgage as they are known, will enable you to release some cash from the equity in your home and to do almost anything you want with it.
You need to be at least 55 years of age and a homeowner, it doesn't matter if you have a mortgage on the property still as this can be repaid from your new lifetime mortgage, subject to the rules of that scheme.
Typically, you will take advice from an IFA or company than can advise you on the whole of the market, such as Key Retirement or the Age Partnership - you are under no obligation to take this advice and there will be no charges for doing so, it's only when you take the mortgage out that there will be a charge.
Once you have applied your property will be valued to ensure that it offers good security for the amount of cash you want and then a solicitor draws up the legal paper work to secure the mortgage on your property and then subject to approval the money is transferred to your bank account.
Interest on the amount borrowed is charged at the agreed amount and as you are not making any monthly repayments the interest rolls up every year, which means that the amount you owe grows, but hopefully the value of your property will also. All equity release schemes come with a "no negative equity guarantee" which means that you will never owe more than the value of your home - see the Equity Release Council website for more details on this.
Whilst you are considering releasing cash from your home, it's wise to also consider whether there are any other options that will allow you to do what you want, they may include;
- your family gifting you some money
- accessing your pension for a cash withdrawal - take care as it could be subject to tax and will impact your pension income
- move to a less expensive property (downsizing) and using the surplus cash
- take in a lodger and rent a room out - not for everyone we admit!
You may wish to read our article "Is equity release a good idea" and of course visit our main equity release section here or if you want to move things forward why not contact Age Partnership to see how much cash you could release from your home