Frequently Asked Questions

 

What is Equity Release?

Equity release is a way of benefiting from the cash tied up in your home without having to move. 

There are three main types of scheme:

1. An interest only mortgage.  For those who can afford to service a conventional type mortgage by paying the interest each month, but need access to a lump sum.  The original lump sum is repaid from the sale of the property, either on death or on entering permanent long term care.

For this type of scheme you would be subject to affordability checks, and therefore the amount that you could borrow would depend on your monthly disposable income and what you could afford in interest payments.

2. A Lifetime rolled-up mortgage.  A mortgage loan is secured against the value of your property, but you make no monthly repayments.  Instead, the interest is accrued and added to the outstanding loan.  When the property is sold, the total amount owed including the rolled-up interest is then repaid, usually on death or on entering permanent long term care.

The amount you can borrow is dependent on your age (or the age of the youngest borrower, if joint) and the value of the property.  Typically it can be anything between 18% and 50% of the property value.  The younger you are the less you can borrow.

3. A Home Reversion Plan.  This is different from the previous two options as it is not a mortgage.  This option involves selling all or part of your home in exchange for cash or income but with the condition that you can remain in your home for the rest of your life. 

This option generally allows you to receive more money than a lifetime mortgage, however, you do not receive the full market value of the share that you sell as the reversion company gives you the right to live in your home for the rest of your life, rent free.  (Some companies may charge a peppercorn rent, typically £12 per annum).

Are there risks involved in Equity Release?

It is important to receive full independent advice to ensure that you fully understand the contract and only take out a product suitable for your needs. Asset Retirement Solutions will provide a full independent advice and recommendation service to ensure you get the right product.

Are there costs involved ?

Yes, all fees will be detailed within the Key Facts Illustration that you receive from us which will be  fully explained prior to making a decision on whether to proceed.

Will I need to use a solicitor?

Yes, it is vitally important that you take independent legal advice from a solicitor who specialises in equity release.  We can provide you with details of solicitors in your area if necessary. 

Will I have to pay a fee for the advice you give me?

We offer a free initial consultation which will include an explanation of any costs involved.

Can we move in the future?

Yes, if you opt for a lifetime mortgage, but early repayment may be subject to an early repayment charge.  Any early repayment charges will be detailed on the Key Facts Illustration that we will provide you with and it will be fully explained to you prior to you making a decision to proceed.

Can we repay the loan at any time?

Yes, if you opt for a lifetime mortgage, but early repayment may be subject to an early repayment charge.  It is important to understand that any Equity Release plan should be seen as a long-term plan.  Early Repayment Charges will be detailed on the Key Facts Illustration that we will provide you with and it will be fully explained to you prior to you making a decision to proceed.

Will our beneficiaries be left with a debt?

No.  The only Equity Release providers we use subscribe to the Safe Home Income Plan (SHIP) Code of Conduct.  All SHIP approved plans must offer a ‘No Negative Equity Guarantee’, which means that should the value of your home be less than the outstanding loan plus interest when the loan becomes repayable, then no further monies will be payable by your estate/beneficiaries.