Equity Release
Equity release is one of the fastest growing areas of the UK mortgage market, with products falling within this category structured towards helping individuals plan for a more prosperous and enjoyable retirement, free from the financial worries which often afflict people within that category.
Even with the benefit of astute financial planning, many people can suffer from a sudden drop in disposable income when they decide to stop working and, as a consequence, can see their standards of living decline.
Equity Release can help prevent this situation occurring by providing funds to help bridge the gap between pre-retirement and post-retirement income levels.
The basic concept of Equity Release revolves around the realisation of money from the value locked into a person's residential property. The release of funds can be generated via two specific financial mechanisms which can be briefly summarised as follows:-
1. Lifetime Mortgage
With a lifetime mortgage, the lending institution will release up to 50% of a
property's market value to its owner, either by way of a lump sum or, if preferred,
with the use of a drawdown facility.
The homeowner(s) would retain the right to continue living in the property and
would have nothing to pay by way of either capital or interest until either
sale of the house or on death (in the case of joint owners, second death).
Interest would, in the meantime, accrue against the amount borrowed and would
be paid to the lender, along with the capital sum borrowed, on either death
or sale of the property. The remaining value in the property would be paid
to either the borrower(s) or to the named beneficiaries.
In all cases, guarantees are in place to ensure that the amount owing will not,
at any time, exceed the value of the property. (The No
Negatve Equity Guarantee)
2. Home Reversion Scheme
This particular product involves the homeowner selling all or part of the property
to the lender for an agreed lump sum. The homeowner(s) retain the right to
live in the property (possibly paying a nominal or peppercorn rent to the lender)
until death or sale at which time the lender will be repaid via a share of
the proceeds based on the percentage of the property which was sold at the
outset. The percentage of the property value which was retained by the borrower(s)
will be paid to either to the borrowers(s) or to the named beneficiaries.
The concept of Equity Release, via either of the methods summarised above, can be quite complex and it is important that anyone considering taking a step of this nature is in receipt of impartial professional advice.
At Property Brief, we have a team of highly trained, fully qualified professional advisers who are able to guide you, and, if appropriate, your family members through the Equity Release process and who will be able to advise you on the type of product which is most suited to your individual requirements.
With the protection of its clients an absolute priority, Property Brief deals only with household name lenders who are registered with S.H.I.P. (The Safe Home Income Plans Association) when offering products of this nature.
Downloadable Forms
Mortgage Decision in Principle Form