Equity Release is a fantastic product for the right people. However, it is not the right product for everyone. Our advisors are on hand to provide expert guidance and advice to help you decide if Equity Release is right for you. We work with you to discuss the alternative options available to come to the right solution for your personal circumstances. What’s more, we offer free initial consultations so there is no charge for this service.
Simple Fast Mortgage are members of the Equity Release Council – Providing Safe Equity Release.
What is Equity Release?
Equity Release allows homeowners to take-out money from the value of their property. Hence, to Release Equity from a property. Effectively, Equity Release is a way to unlock the hidden value in a property, and turn that value into cash. You do not have to move or sell the house to do this. Additionally, you do not need to have paid off any mortgage to use it.
When releasing equity (cash) the homeowner gains money to assist with their capital or income needs, yet still has the right to live in their home.
There are different types of Equity Release products depending on an individual’s needs. For example, you could release the equity in one lump sum or in several smaller segments. Indeed, there are products that combine both and products that can provide an income.
Although, Equity Release is only available to property owners who are 55 years of age or above.
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How Does Equity Release Work?
There are two main forms of Equity Release. To clarify, these are Lifetime Mortgages and Home Reversion Plans. This guide will concentrate on Lifetime Mortgages. When we say Equity Release we are referring Lifetime Mortgages.
When people mention Equity Release they usually mean a Lifetime Mortgage. A Lifetime Mortgage is a loan secured against your property.
Put simply, you do not need to repay a Lifetime Mortgage until you die or move into long-term care. Equally, where a joint lifetime mortgage is held, this applies to the last surviving spouse. Commonly, Lifetime Mortgages are the most popular type of Equity Release product. This is because you retain full ownership of your home. Thus, many feel Lifetime Mortgages are a safe product.
There is one primary difference between a traditional mortgage and a Lifetime Mortgage. Basically, you are not required to make mortgage repayments whatsoever. Your Lifetime Mortgage will be repaid after the last living homeowner moves into long-term care or passes away. Consequently, at this time the property can be sold to repay the mortgage loan and any accumulated interest.
As a result, the accumulation of interest over the Lifetime Mortgage term will reduce the inheritance you leave behind. The accumulation of interest without repayment is called compounding. However, Lifetime Mortgages allow you access to cash during your lifetime whilst remaining in your home.
Some Lifetime Mortgages offer the option to protect a proportion of the property value for inheritance purposes. Or the option to make payments. Talk to a financial advisor about this.
Lifetime Mortgages offer the ability to partly or fully service the interest payments each month. If you make payments you can reduce the amount that you need to repay after the property is sold. Therefore, you can leave a larger inheritance for loved ones. For example, if you fully service the interest only the original loan capital would remain outstanding at the end of the mortgage term. Furthermore, any Lifetime Mortgages also offer the flexibility to make ad hoc repayments of the loan capital.
With a Lifetime Mortgage, the homeowners borrow a part of the value of the property. Typically, your interest rate is fixed. You can take the borrowing as a lump sums, staged drawdown, or as an income.
If you chose not to make any repayments, the interest would continually compound. As such, it will increase the amount owed after death or a move into long-term care.
Comparatively, with a standard mortgage you repay the loan interest and capital each month, reducing the amount owed. At the end of your mortgage term your loan is fully repaid
As mentioned above, you do not have to take a cash lump-sum in one go. There are options such as ‘drawdown’ Lifetime Mortgages. Drawdown is where you may take out multiple smaller cash lump-sums as required. Basically, you will agree a maximum loan facility at the outset. The lump sums can be taken subject to the overall maximum. Therefore, a smaller amount is subject to interest charges at the start. Instead, your interest is charged on the amount of cash you actually take.
Lifetime Mortgages are the most popular form of Equity Release. A Lifetime Mortgage may be suitable for you if you are aged 55 or above. Contact Us to discuss your options in more detail.
Unlike a Lifetime Mortgage, a Home Reversion Plan is not a loan. Instead Home Reversion Plans involve the sale of a share of your property to release a cash amount. As a result, you would not owe any money and you wouldn’t accrue any interest.
This guide will focus on Lifetime Mortgages. Read more about Home Reversion Plans in our guide:
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There are alternatives to consider. Therefore, it is best to weigh up every option before deciding whether any form of Equity Release is right for your individual needs.
Downsizing could be a more preferable option to releasing cash from your property.
Retirement Interest Only Mortgage (RIO)
If you can afford to service (pay the interest payments) on a mortgage you may have an option of a Retirement Interest Only (RIO) mortgage. RIO is available to those age 55 and over and is designed to be a mortgage for life.
- Sale of Investments or Assets
- Local Council Schemes
- Friends and Family
- Other Income or Savings
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Free periodic reviews to make sure everything is working as it should be and that you remain on the best deal
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Personalised advice on life and home insurance to ensure that your home and family are protected if things go wrong
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What If My Circumstances Change?
Another point to contemplate includes if you think your circumstances may change in the future.
Maybe you are not considering a home move now, but could that be a possibility in the future? If so, you may have to repay part of a Lifetime Mortgage when you sell your home. Indeed, you might be able to transfer the Lifetime Mortgage to your new home. However, the ability to transfer is not guaranteed.
Another point to consider is if someone might come to live with you later in life. For instance, you might start a new relationship, or get married.
As a result, there are many factors that need to be weighed up before considering exactly what is right for yourself. Contact Us to discuss these areas in more detail.
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Equity Release and State Benefits
Another key point is the effect a Lifetime Mortgage will have on any benefits. Are you entitled to benefits? Now or in the future? It’s good to take a long-term view. Clearly, you should weigh up whether the cost of an Equity Release product may be more than the savings you gain from these benefits. Contact Us for expert advice in this area.
Lifetime Mortgages can only affect means tested benefits. To explain, means tested benefits involve your income or savings being assessed to confirm if you are eligible. As such, there is no impact on benefits like the state pension. The state pension is available to everyone.
Means tested benefits are things like, Council Tax Reduction, Pension Credit, or Long-Term Care Costs.
Most Lifetime Mortgage products have a fixed rate of interest. Usually, fixed for the lifetime of the mortgage. However, alternative interest rates are available.
If you get the best interest rate now, you will have one big advantage. That is, you can limit the build up of debt to be repaid later. Simple Fast Mortgage work with a number of Lifetime Mortgage providers to find you a competitive solution. However, Equity Release interest rates change regularly, and are dependent on your personal situation. For this reason we do not publish interest rates on our website. Contact Us today to discuss what is available.
Yes. Equity Release products regulated by the Financial Conduct Authority (FCA) and governed by the Equity Release Council are safe. Simple Fast Mortgage is regulated by the Financial Conduct Authority (FCA). We are also a member of the Equity Release Council. As such, your loan will never be more than the value of the property. Contact Us and speak to a patient and experienced mortgage professional to discuss your concerns.
With a Lifetime Mortgage you will always own your own home. Therefore, if your home increases in value, that increase in value is yours. Any Lifetime Mortgage we recommend to you comes with a No Negative Equity Guarantee. As such, the mortgage will never be more than the value of the property.
Whilst you live in the property you will always have control and ownership of your home. And you will always have the right to remain in your home until the last survivor passes away or moves into long-term care.
You cannot take a Lifetime Mortgage product without advice from a qualified and regulated mortgage advisor like us. The process to release equity from your house is fairly straight-forward. It usually takes 6 – 8 weeks assuming there are no complications. Contact Us today to get things started.
There is no such thing as the best Equity Release. There is only the best Equity Release for you based on your personal circumstances and requirements. I will explain why.
The Equity Release products available to you will be based on your age, health, amount you wish to borrow and property value. There are also other factors to consider. It is a requirement that you must take financial advice. As such it’s best to speak to a qualified expert to understand your options. Contact Us for a free assessment of your circumstances.
You may need fast Equity Release. Perhaps you need money fast to repay a debt or make a purchase or for other reasons. Simple Fast Mortgage specialise in releasing equity from your property fast. We simplify complex matters so you can make an informed decision. Contact Us to arrange a free initial discussion.
However, it is equally important to ensure you make a sound decision, explore the alternatives, and receive high quality advice. Simple Fast Mortgage is a member of the Equity Release Council. This means we subscribe to a high professional standard and ethical code. The advice we give you is backed by a No Negative Equity Guarantee.
We will explain all the options for you including the benefits and disadvantages of each one. Our advisors will provide a written report to you detailing our advice. We will be on hand to answer any questions you have. Contact Us to book a convenient time to assess your options.
In London your property value will have increased significantly. Much more than the rest of the country. Indeed at the end of 2020 the average property price in London hit an all-time record high. As such your wealth is probably tied up within your property. But how can you access this wealth? Contact Us to find out.
Equity Release requires advice from a qualified advisor approved by the Financial Conduct Authority (FCA). Consequently, you cannot take a Lifetime Mortgage without advice. The advisor will talk to you impartially about your individual needs to allow you to make an informed decision. Contact Us to have a discussion.
Never feel pressured to make a decision. Always weigh up any advice and take your time to consider the options. Following this, if you feel a Lifetime Mortgage is right for you there are some costs you should be aware of.
There is usually a one-off fee to cover the advice from the advisor. Surprisingly, this could be anything from zero up to many £1,000’s. Take note, some advisors charge a percentage of the amount you borrow!
Simple Fast Mortgage will assess your circumstances and provide our initial advice for free. We will charge a fixed fee of £599 if you decide to apply for a Lifetime Mortgage with us. In return, we will complete all the paperwork and manage the entire process until the mortgage completes.
Our advice fee is much lower than our main competitors. Contact us with your enquiry.
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