"You reap what you sow. Then energy you put out really does come back to you."
Michael Imperioli
Actor – The Sopranos
EQUITY RELEASE
Keep your front door locked.
Unlock tax-free cash.
 It’s possible that the older you get, the more sources of income you will need. Life can throw some curveballs, whether good or bad, so being prepared for these can be a great help when your only income is your pension.Â
Selling your house is not the only way to generate money from it. If you own your house outright, you are able to apply for an equity release scheme which will allow you access to a large portion of the money tied up in it.
With equity release, you can receive a significant amount of money, and remain in your home, something that’s very useful should you need to cover the cost of large expenses like long-term care.
Here To Help
There’s a lot to consider when it comes to releasing equity.  There’s are many financial responsibilities you will have to ensure you’ve covered before you can get started.
As with most things in finance, there are positives and negatives to releasing equity, and it’s important to make sure it’s the right route for you before you begin the process.Â
Across all the pages in this section, we provide a series of guides to help you find what you should be looking for, particularly when it comes to equity release, so when that time comes, we can help you…
CHOOSE THE ADVISER WHO UNDERSTANDS YOUR NEEDS.
What is releasing equity?
If you sold your house for cash, how much would you walk away with? This amount is the ‘equity’ you have; the market value of your property without any unpaid mortgage.Â
Selling your house is not the only way to generate money from it. If you own your house outright, you are able to apply for an equity release scheme which will allow you access to a large portion of the money tied up in it.
With equity release, you can receive a significant amount of money, and remain in your home, something that’s very useful should you need to cover the cost of large expenses like long-term care.
Unfortunately, as with most things in finance, there are negatives to this process and several restrictions. There are two routes to take, lifetime mortgages and home reversion schemes which are generally available to any aged 55-95.
Lifetime mortgages
A lifetime mortgage is the most popular type of equity release. You borrow a mortgage which is eventually repaid once your house is sold after you die. The older you get, the more you can release, with the percentage you can borrow ranging between 18% and 50% of the total value.
You can reduce the amount of interest you pay by paying off the interest as you go. As well as this, you can find providers who offer ‘no negative equity’ guarantees. These mean that you will never acquire a debt that is more than the value of the property.
Involve your financial adviser in any conversation you have regarding a lifetime mortgage. They can help you identify the pros and cons for you and your situation.
Home reversion schemes
With this, you can sell all or part of your home but maintain your right to live it. Your money will be paid either by lump sum or become a regular income. One downside of this is that you will no longer receive full market value for your home, and in some cases, you can only apply if you are over 60.
Make sure if you choose this option, that you have considered all your future plans and that you are covered for the rest of your life.
Do I have any protection?
To stop people losing out, the Equity Release Council was set up. They can make sure you stay in your home until you are no longer able to, and make sure you never owe them more than the total sale price. Employing a solicitor to review any documents relating to this is advised before you sign up.
So, are there any risks?
Unfortunately an equity release scheme does reduce the amount of inheritance any loved ones may receive once you are no longer around.
As well as this, the compound interest involved in a lifetime mortgage could actually mean you end up owing more than you borrowed. If you want to leave behind a good inheritance for your family, make sure you are savvy when it comes to a lifetime mortgage and make the regular repayments to avoid too much interest.
It’s possible to avoid this by taking out smaller lifetime mortgages across a period of time. Having money invested in your home is often more likely to grow than sitting in a cash bank account, which can also reduce the amount of benefits you are eligible for.
A financial adviser will be able to explain more about the risks of this process, and whether it would work effectively for you and your family.Â
Can I end the scheme early?
Speak to a financial adviser as soon as you change your mind about the scheme. It might be a change of circumstance, or a change of heart that lead you to want to exit but bear in mind that it can cost to leave early. In addition to this, moving home doesn’t affect the scheme, you simply have to tell the equity release company who will adjust.
How do I set it up?
There may be other options available, such as downsizing, that are more suitable for you and your finances. Speaking to your financial adviser external, expert view will help you assess this.
The Tavistock Group manages the personal wealth of tens of thousands of people and over £1Billion of investments, providing them with financial advice and access to investment products and services.
We do not charge for initial consultation meetings. If you would like a face-to-face meeting, feel free to pop over to our office or we can always can come to you.
Give us a call today on 01432 343322 and ask to speak with one of our advisers,
or email discover@abacusadvisers.co.uk
Download this page as a PDF
Or complete the contact form below and your details will be passed onto an adviser who will contact you to make a free consultation appointment.
Contact Us
We would love to answer any questions and/or schedule a complimentary consultation. Please call or email us using the details below:
Call: 01432 343322
Email: discover@abacusadvisers.co.uk
Alternatively, use the 'Adviser Finder' page here >
Abacus Associates Financial Services is a trading style of Tavistock Partners (UK) Limited which is authorised and regulated by the Financial Conduct Authority, FCA number 230342.
Tavistock Partners (UK) Limited is a wholly owned subsidiary of Tavistock Investments Plc.
Tavistock Partners (UK) Ltd trading as Abacus Associates Financial Services are only authorised to give advice to UK residents.
Registered in England Registered OÂffice: 1 Queen’s Square,
Ascot Business Park, Lyndhurst Road, Ascot, Berkshire, SL5 9FE, Company Number 04961992.
Will writing and some aspects of tax planning are not regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on a mortgage.
The firm is not responsible for the content of external links.
