Equity release is soaring in popularity, with a staggering £670m of housing wealth withdrawn in quarter four of 2016*. Equity release has evolved and changed significantly in recent years, new providers have entered the market increasing the range of products available.
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So, if you are considering equity release as a way to boost your finances, here are some facts you really should know:
What is equity release?
Equity release is a way to tap into some of the cash locked in your home. The money you release can be spent in any way you choose, whether that is on home improvements, an exotic holiday or treating your loved ones. There are typically no monthly repayments to make as the full amount owed is designed to be paid from the sale of your home when both you and your partner die, or move into long-term care.
Who is equity release for?
Equity release is typically available to those who aged 55 and over to 95, and own a property worth at least £70,000.
What if I have an outstanding mortgage?
You can still qualify for equity release even if you have an existing mortgage, as long as you use the released funds to pay this off first. Releasing equity is increasingly being seen as something of a lifeline to those struggling to pay off their interest only mortgage.
“…new providers have entered the market which has increased the range of products available.”
How safe is equity release?
Equity release is fully regulated by the Financial Conduct Authority. When looking for an equity release plan, you should ensure the providers are members of the Equity Release Council, which will provide you with extra safeguards such as the no negative equity guarantee.
This ensures that regardless of what happens to house prices, when your equity release plan comes to an end, you will never owe more than the value of your home.
The Telegraph works in partnership with Responsible Life, an award-winning equity release specialist, which advises on plans approved by the Equity Release Council. All equity release sales must be accompanied by advice.
It is important to obtain advice from a specialist in equity release, who will ensure you are made fully aware of the costs involved, and what taking out a plan means for you and your family. They will also explain how equity release may reduce the value of your estate and may affect your entitlement to means tested benefits.
Will I still own my home?
With a Lifetime Mortgage, the most popular type of equity release, your home remains your own; you have the right to continue living there for as long as you choose, or equally you are free to move home at any point in the future and take the plan with you (subject to provider criteria). Just like a traditional mortgage, a lifetime mortgage is a loan secured against your property.
Can I involve my family?
Absolutely. Equity release will affect the inheritance you leave, so it is important to include your family in the decision-making process. Your Responsible Life adviser will actively encourage you to involve your family in the entire process including making them welcome to attend your meetings with your adviser if you wish.
How much will it cost?
Average lifetime mortgage interest rates are lower than they were a year ago, and this rate will be fixed for the lifetime of the loan so you know exactly what it will cost. Taking advice from an independent specialist like Responsible Life means you will have full access to the best equity release deals across the whole of the market.
Your adviser will explain any other costs that may be involved, such as solicitor fees, valuation fees and adviser fees. You will be provided with an illustration detailing all of the costs involved, ensuring you are fully aware of what the plan will cost you before you commit to going ahead.
How do I find out more?
You can read our free equity release guide co-produced by The Telegraph and Responsible Life. Independently written by Mel Wright, the guide is the ideal first step towards discovering whether equity release could be the right financial move for you.
Unless you decide to go ahead, Responsible Life’s service is completely free of charge as the typical advice fee of £1,295 will only be charged if your case completes
Request your free, independently written equity release guide now.
*Equity Release Council figures, January 2017
Please note we are not authorised to provide advice or arrange equity release products, so we have partnered with a leading equity release specialist to provide this service to you.
This is a Lifetime Mortgage which may impact the value of your estate and could affect your entitlement to means tested state benefits. To understand the features and risks, as for a personalised illustration. Only if your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,295.
By consolidating your debts into a mortgage, you may be required to pay more over the entire term than you would with your existing debt. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Telegraph Equity Release Service is provided by Responsible Life Limited
The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions click here