Equity Release - Independent Equity Release Advice

Equity Release Plans – Lifetime Mortgages & Home Reversion Plans
Our mortgage sourcing technology and lender/provider relationships enable us to research from the ‘Whole of Market’.

Equity Release made clear
Money is a bit tight? If you own your own home and are over 50, you may be thinking about Equity Release because it could provide you with a lump sum or additional income. You might also consider Equity Release for tax-planning reasons.

Before considering Equity Release
It’s important to check whether there are other ways you could meet your financial needs before choosing an Equity Release scheme. Some ways might be to:
  • claim any benefits you might be entitled to;
  • check to see if your local authority can help you to pay for essential home improvements;
  • trace any pensions you may have lost track of, using the Pension Tracing Service;
  • use your savings or sell your investments, but consider getting advice before doing so; and/or
  • sell up and buy somewhere smaller and cheaper (downsize).
What is Equity Release?
The equity (value) you have in your home is it's open market value less any mortgage or other debt held against it. Equity Release is a way of getting cash from the value of your home without having to move out of it. These schemes can be helpful in certain circumstances but are not suitable for everyone.

How does it work?
One way is to borrow a lump sum secured against your home. Another way is to sell part or all of your home to give you a regular income or lump sum, or both. You can continue to live there.

Types of Equity Release
There are two main types of Equity Release scheme:
  • Lifetime Mortgages; and
  • Home Reversion Plans
Lifetime Mortgage
With a Lifetime Mortgage, you take out a loan secured on your home. This Mortgage may be:
  • A Roll-up Mortgage (rolled up means interest is added to the loan – for example, each year). You get a lump sum or regular income and are charged interest which is added to the loan. The amount you originally borrowed, including the rolled-up interest, is repaid when your home is eventually sold.
  • A fixed repayment Lifetime Mortgage. You get a lump sum, but don't have to pay any interest. Instead, when the home is sold, you have to pay the lender a higher amount than you borrowed. That amount is agreed in advance. The lender uses this higher sum to repay the Mortgage when your home is sold.
  • An interest-only Mortgage. You get a lump sum, and pay a monthly interest on the loan, which can be fixed or variable. The amount you originally borrowed is repaid when your home is eventually sold.
  • A Home Income Plan. The money you borrow is used to buy a regular fixed income for life (an Annuity). This income is used to pay the interest on the Mortgage and the rest is yours. The amount you originally borrowed is repaid when your home is eventually sold.
When taking out a Lifetime Mortgage, you can choose to borrow a lump sum or to opt for a drawdown facility. This is suitable if you want to take occasional small amounts rather than one big loan, as it means you only pay interest on the money you actually need.

How does it work?
As with a conventional Mortgage, you borrow money secured against your home. The home still belongs to you. Apart from roll-up schemes and fixed repayment Lifetime Mortgages, you will have to pay interest on the loan every month. When you die or move out, the home is sold and the money from the sale is used to pay off the loan. Anything left goes to your beneficiaries.

If there is not enough money left from the sale to pay off the loan, your beneficiaries would have to repay any extra above the value of your home from your estate. To guard against this, most Lifetime Mortgages offer a no-negative-equity guarantee. With this guarantee the lender promises that you (or your beneficiaries) will never have to pay back more than the value of your home - even if the debt has become larger than this.

Lenders will expect you to ensure that the condition of your home is maintained at a good level.

Home Reversion Plan
With a Home Reversion scheme, you sell all or part of your home in return for a cash lump sum, a regular income, or both. Your home, or the part of it you sell, now belongs to someone else, but you are allowed to carry on living in it until you die or move out.

How does it work?
A company either buys your home or a part of it. In return you get a cash lump sum or an income. If you get a cash lump sum you may decide to invest this yourself to provide an income.

The buyer allows you to carry on living there and cannot sell it until you die or move into care. You normally receive up to 60% of the value of your property and the older you are when you start the scheme, the higher the percentage you’ll get.

Information
Take care to ensure that the Adviser you are dealing with has the experience and expertise that you require. We are regulated by the Financial Conduct Authority and are authorised to advise on both Home Reversion Plans and Lifetime Mortgages.

Choosing from all the different types of Equity Release Plans available can seem like an obstacle course – we give totally unbiased advice, from the ‘Whole of Market’ so let us help you make the right decision.

Please contact us for all your Independent Equity Release Plan advice.  

THIS IS A LIFETIME MORTGAGE OR HOME REVERSION PLAN. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION.

The guidance and/or advice contained within this website are subject to the UK regulatory regime, and are therefore targeted at consumers based in the UK.
Grange Financial (Sussex) Ltd is a member of Best Practice IFA Group Ltd which is authorised and regulated by the Financial Conduct Authority. The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service, please visit www.financial-ombudsman.org.uk. Details can be found at https://register.fca.org.uk/ under reference number 229110. Grange Financial (Sussex) Ltd is registered in England, no. 4502151. Registered office 88 Boundary Road, Hove, East Sussex, BN3 7GA.