Late Life Lending
Moving home can be an expensive and stressful process at any age.
Many people would prefer to stay put and benefit from the ‘equity’ or value tied up in their homes, and equity release schemes allow them to do that.
There are various types of plans available to homeowners aged 55 and over. With Lifetime Mortgages where the interest is rolled up, a loan is taken out on the property to provide a lump sum, an income or a combination of the two. No interest is payable until the home is sold, which could be when you and your partner have both died or gone into long-term care.
A Lifetime Mortgage with a drawdown facility allows you to take the cash in stages as it suits you. This can be useful as it gives flexibility and the reassurance that you can access further funds at some point in the future should you need them. Interest is also only charged on funds when they are drawn down.
A Home Reversion scheme lets you sell part or all of your home in return for a tax-free lump sum or a regular income and is normally available to homeowners aged 65 and over.
You will normally receive below a below market value for your property, as you retain the right to stay in your home rent-free until you die or move out permanently.
When this happens, your home will be sold and you or your estate will receive the value of your share. The value you receive will be the amount your home sold for, minus the share you sold to the equity release provider originally.
This means you’ll know exactly what percentage of your home’s value will be left to your estate on your death.
Professional advice is essential and equity release isn’t the right solution for everyone. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so you should involve your children and dependants from the outset.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it.