Equity Release

Help yourself through retirement…

Equity Release is becoming an increasingly important tool for those in their latter years as a way of enhancing income in retirement and paying for those “little extras”.

However, there are other uses to which an extra sum of money might be put. How about making those valuable improvements to your home in the event that care becomes necessary, but no Local Authority funding is in place because you may be financially disqualified? Or raising money against property to fund the deposit on a grandchild’s first step onto the property ladder?

Here at Lansdown Place We are able to deal with the whole range of Equity Release products, including all kinds of second mortgage for those who are younger and may wish to help their own children realise their property-owning dreams.

Equity Release falls into two main camps: Lifetime Mortgages and Home Reversion Plans.

Lifetime Mortgages

• Roll-Up Mortgage: A loan against your property is granted, and interest accumulates at a variable or fixed rate, which may not need repayment until the property is sold. This could be upon your death, or entry to a care home.

• Interest Only Mortgage: You pay only interest on your loan. When your home is sold you repay the capital sum previously advanced.

• Fixed Repayment Mortgage: You receive a lump sum, but repay a higher amount later on. Exactly how much you can borrow is determined by your age and life expectancy, as is the final repayment figure.

• Home Income Plan: Again a lump sum is provided, but this time it is used to purchase an annuity, which will provide a regular income. This income is used to pay interest on the loan, and any residual income is yours to spend as you wish. These schemes are better suited to older clients, as annuity rates improve the older you get.

• Shared Appreciation Mortgage: In return for a lump sum you agree that the lender takes a share in the appreciation in your property value. Little or no interest is usually charged.

Home Reversion Plans

• An arrangement is procured whereby all or some of your property is sold to a third party and you may use the resultant lump sum as you wish, even to create an income. Because of the uncertainties involved, principally your actual lifespan, the company concerned may offer significantly less than market value for the purchased portion of your property. Generally speaking these schemes may be more suitable for older clients.

There are a number of questions you will need to ask yourself before committing to any of the above arrangements:

• Could it affect your income tax position or entitlement to State Benefits?
• Could it restrict your future options?
• Do you need a fixed or variable income?
• Will this be dependent on investment growth?
• Could your investment lump sum be lost, or could guarantees be put in place?
• Have you examined all of the available options?
• How will this affect the amount of money you leave any beneficiaries?
• Will your plans help to reduce Inheritance Tax?
• Have you considered the effect of inflation on your income?

Since the introduction of both regulation and SHIP (Safe Home Income Plans) in 1991, Equity Release schemes have enjoyed a new status. However, it is essential that Independent Financial Advice is sought before entering into any such agreement.

Lansdown Place is able, through the efforts of dedicated mortgage professionals, to find the best scheme for your needs, or suggest viable alternatives which may not have been considered so far.

Please telephone 0845 30 50 222