Equity Release

WHAT IS EQUITY RELEASE?

If you are a UK homeowner aged 55 or over, equity release could offer you a way to access money tied up in your home without moving.

The schemes are designed to allow you to;

  • To release a tax-free lump sum, a regular income or both.
  • The ability to release funds when you need it.
  • The freedom to spend your money on almost anything you choose.

Before considering Equity Release or Home Reversion plans it is recommended that you consider all your other potential options first to achieve your aims. These include, but are not limited to those listed below;

• Savings & Investments
• Pension Credit / Council Tax Benefit
• Grants for repair or modifications to a property
• Moving to a smaller home
• Selling the home and renting

You must also consider how your State Benefits entitlement may be affected by equity release.

Equity release products are either lifetime mortgages or home reversion plans.

We offer a comprehensive range of equity release products from across the market but not deal’s that you can only obtain by going direct to a product provider.

For Equity Release Mortgage we charge a fee of £1,295. We will also be paid commission from the product provider for arranging the lifetime mortgage or home reversion plan on your behalf.

THERE ARE TWO MAIN TYPES OF EQUITY RELEASE SCHEMES

A Lifetime Mortgage – Normally available from the age of 55

This is secured against your home and enables you to borrow a proportion of your home’s value. Interest will be charged on the amount.

There are 2 main types of Lifetime mortgage;

The first one being an Interest Roll Lifetime Mortgage. Where unlike a traditional mortgage, there are no monthly repayments with nothing to be paid back until you die, sell your home or go into long-term care. Interest is added to the loan and this interest is compounded or ‘rolled up’ over the period of the loan which means your debt would roughly double over a 10-15 year period depending on the rate that can be obtained. The downside to this is that, slowly at first, then gradually speeding up, the equity you hold in your home is eroded. This may limit your options later on and will reduce the value of your estate.

The 2nd type entails you making interest payments on a monthly basis, much like a traditional Interest Only mortgage. This helps to keep the debt level down. Often these are taken out where there is sufficient income through pension provision in place to make these payments. They can often be converted to an Interest Roll Lifetime Mortgage at a later date as suits the client.

A LIFETIME MORTGAGE CAN QUICKLY ERODE THE REMAINING EQUITY AND AS A RESULT THERE MAY BE NO VALUE LEFT TO PASS ON.

Reversion Scheme – Normally available from the age of 65

This normally allows you to sell a share of your property to the provider for less than the market value. You have the right to stay in your home for the rest of your life. When you die or move into long-term care and the property is sold, the provider gets the same share of whatever your home sells for as repayment. For example, if you sold 50% of your property to the provider, it would get 50% of the sale price. Again this may limit your options later on and will reduce the value of your estate.

You are more likely to qualify for an equity release scheme if you have no current mortgage, or if any mortgage you have is relatively small. Additionally if you have any loans secured against your home, these will be needed to be paid off in their entirety on or prior to completion.

It is advised that customers seek Independent Legal advice before entering into a legally binding equity release contract.

Equity release has to fit with a customer’s needs, circumstances and preferences, where the benefits need to outweigh the drawbacks and be more suitable than alternative methods of raising funds.

EQUITY RELEASE MAY REQUIRE A LIFETIME MORTGAGE OR HOME REVERSION PLAN. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION.

APPLE MORTGAGE SOLUTIONS, Castle House, Park Road, Banstead, Surrey, SM7 3BT

Joe Quigley, trading as Apple Mortgage Solutions, is an appointed representative of TenetLime Limited, which is authorised and regulated by the Financial Conduct Authority. TenetLime Limited is entered on the Financial Services Register (www.fca.gov.uk/register) under reference 311266.

The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK only.