There are many frequently asked questions made to the team at Equity Release Supermarket. Here we encompass the common questions we get asked and hopefully provide guidance to help you find the best equity release scheme.
Will I qualify? A. This depends on the age of the youngest person on the title deeds & also property criteria.
For lifetime mortgages the minimum age is 55 and for a home reversion plan the minimum age is 65.
The minimum property value acceptable in the equity release marketplace is currently £70,000.
How much should I release? A. You should only initially withdraw an amount that you have a purpose for. Remember it will cost you interest to draw more money than you need. Do not withdraw equity solely for investment purposes. If you need more cash in the future, then we can assess your needs & recommend a product that is suitable for your personal circumstances such as a drawdown lifetime mortgage. To establish the maximum equity release available, then feel free to use our equity release calculator.
Who should I speak to? A. Being such an important decision, we suggest that you discuss matters with your family, as their inheritance will ultimately be affected by a release of equity from your property. We also recommend that you seek advice from a qualified Independent Equity Release specialist such as Equity Release Supermarket, who are able to access the whole of the equity release market from lifetime mortgage schemes through to home reversion plans.
How will my property be valued? A. Your home will be surveyed by an independent valuer & this report will determine the amount available to you. The valuation will be based on similar properties in your area that have actually sold. Based on the results of the survey, an equity release offer will be produced outlining the terms of the equity release plan.
What happens if I die or move into long term care? A. On death or moving into long term care for a single life (or 2nd life if joint borrowers) your executors will need to contact the equity release provider. They will be responsible for repayment of the plan, which is usually by the sale of the property. This normally needs to be within 6 to 12 months. Interest will continue to be charged until the loan is repaid.
Can releasing equity affect my state benefits? A. A release of equity can affect certain means tested benefits such as pension credit, savings credit & council tax benefit. It's therefore important that we fully understand your personal circumstances. Equity Release Supermarket's duty of care is to fully explain any potential implications, before proceeding. We will endeavour to offer the best equity release advice to ensure benefits aren't lost.
Who owns my property? A. With any lifetime mortgage you will retain full ownership of the property and 100% of any escalation in the property value. However, with a home reversion scheme you will no longer fully own the property. Ownership will depend on how much of the property is sold to the home reversion company. Nevertheless, you will have the right to remain in the property, usually rent free, for the rest of your life by way of a lifetime tenancy.
What are the fees? A. Equity Release Supermarket charges no upfront fees for your initial consultation. Our advice fee if you decide to proceed is covered in ‘what are our fee options’ section. Additionally, lenders may charge you a valuation fee, an application fee & finally you will need to cover the cost of your own legal fees. Some of these costs may be refunded on special deals we negotiate. See the compare equity release deals section for our exclusives.
Can I still move house? A. All Equity Release Council members (formerly SHIP) allow you to move to another property as long as it meets the providers lending criteria. This will be dependent on the property value & each case will be considered on an individual basis. Also, from experience some people have used lifetime mortgages to move to a more expensive property, such as a bungalow for mobility reasons.
Will I have to pay tax? A. The lump sum you receive is tax free. If you invest the cash to provide an income, part or all of the income, or growth on investments may become taxable. If you are gifting monies from the proceeds of equity release, then you will need to contact us, as this can have implications on your estate planning. We have inheritance tax planners that can provide guidance on such matters.
Can someone else live in the house? A. Yes. A spouse or partner to the plan will continue to live in the property even after you pass away or move into long term care. However, anyone living in the property who is not party to the equity release plan will need to sign a waiver of occupation rights. Thereafter, in the event of death or moving into long term care, they will then need to vacate the property.
What about my credit history? A. Equity release schemes are not dependent upon repayment ability; hence a good credit history is not essential. Nevertheless, this will be dependent upon the gravity of the adverse credit & given our experience, we can place your case accordingly by researching the whole of the home equity market.
What if I pay off the equity release early? A. Equity release mortgages are designed to run for the rest of your life and only repaid if you move into care or on when you die. This means that if the loan is repaid in full during its term, then an early repayment charge may arise. This will be dependent on the mortgage provider. There are plans now whereby no early repayment charge exists whatsoever. Please contact us on 0800 678 5159 if you require further details on these types of equity release loans.
How much will my beneficiaries receive? A. This depends on the type of equity release mortgage selected. If you chose a home reversion scheme then your beneficiaries will receive a guaranteed percentage of the final sale price of the property.
With a lifetime mortgage there are two factors that affect this. As interest is rolled up during your lifetime, the final balance is determined by how long you live. Secondly, the property’s final value is important. Therefore, on repayment your beneficiaries will receive the eventual sale price, less the balance of the lifetime mortgage. This could reduce, possibly to nothing, if your house value does not increase sufficiently. However, under Equity release Council rules you are guaranteed not to leave a debt to your beneficiaries due to inclusion of the no negative equity guarantee. Additionally, some lifetime mortgages now have the option of including an inheritance protection guarantee which protects a percentage of the final value of the property
If I have an existing equity release plan, can I borrow more? A. Possibly. This will depend on your lifetime mortgage scheme & how your balance & property value has increased since inception. We can ascertain whether it is best to top-up your existing scheme, or switch equity release plans to a new provider. This may be to release further funds or even achieve a lower interest rate than your previous scheme, if it was taken out many years ago. This advice can potentially save thousands of pounds for your estate over the long term.
Why is it important I obtain Independent advice? A. We recognize this is an important decision for yourself & your beneficiaries. Therefore, it is essential that your situation is evaluated & the best product sourced for you. Only an Independent Equity Release specialist such as Equity Release Supermarket, who research the whole of the market, can offer this & give advice on any scheme in the marketplace.
What is an enhanced or impaired equity release scheme? A. Similar to lifetime annuities, certain equity release schemes will now take into account the state of health of the applicant. Therefore should a history of poor health be in evidence, then a larger than the standard equity release loan will be made. This is due to the fact that underwriters will assess the potential life expectancy based on mortality rates & health & make a judgement call upon this data. The qualifying health conditions vary in extremity from high blood pressure, height-to-weight ratio, smoking, cancer, heart attack, diabetes, Parkinson's, retirement due to ill-health.
Can I make partial repayments of capital? A. Some lifetime mortgage schemes now allow either the monthly repayment of interest, or even allow upto 10% of the original amount borrowed can be repaid each year. Interest only lifetime mortgage plans have now become popular whereby clients wish to keep the balance level thorughout the term and protect their inheritance. Most existing equity release loans will allow partial repayments, however these could attract early repayment charges. Therefore, check with an Equity Release Supermarket adviser before committing to an application.
These are lifetime mortgage and home reversion plans. To understand the features and risks, please ask for a personalised illustration.
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