By Roger West, Director at Peritum Mortgages
I often tell my clients – both young and old – that they are living in a money box, and if, as old age creeps up on them, they find that a little extra cash would be useful we will shake the money box and see how much money we can find.
Equity Release can be a lifesaver
Of course, I am talking about equity release, which is usually obtained by way of a Lifetime Mortgage. For a home owner aged at least 55 this can often be a lifesaver, although it is certainly not the right option for everybody.
Lifetime Mortgages are very heavily regulated to protect the ‘later life’ generation from miss-selling and poor advice.
Obtain "Tax Free" money for just about any purpose
Money obtained from an Equity Release exercise can be used for just about any purpose, including repayment of an existing mortgage, home improvements, gifts to family members and much, much more.
There is no tax to pay on monies that are released from the equity of your home and because there are no mandatory monthly payments to the lender borrowers, they are not subjected to a lot of qualification questions, checks and references.
A word of caution
As the interest on a lifetime mortgage is added to the loan and rolls up over time, the remaining equity in your property reduces and therefore so does the amount of your future beneficiaries inheritance.
Protection is available in two forms.
The first is that a percentage of the property value can be ring-fenced so that it is never affected by increasing debt. The second is that lenders who are members of the Equity Release Council (and we only use those that are members) all provide a ‘no negative equity’ guarantee. However much is owed when the property is eventually sold, any negative equity would be waived by the lender who would suffer the loss – not your beneficiaries.
As whole of market advisers we can always find the deal best suited to your needs and circumstances.
Increasing popularity - Could this be the answer for you?
The equity release market is increasing steadily and whilst it might be a target for many to clear their mortgages by the time they retire, many people are switching to equity release to raise capital without necessarily having to make any monthly payments in retirement.
Case study - How we helped one of our clients
We were contacted by a lady who had sadly recently buried her partner of 30 plus years who had died suddenly.
He did not make a will so she was not entitled to anything from his estate. He did not have any life assurance or pension arrangements.
She does not work and lives on Universal Credit – which is about £400.00 per month – not nearly enough for a decent lifestyle. Without her partner’s income she did not have enough income to pay her mortgage or her credit cards and after several discussions, which also involved her son, we decided that equity release was the only realistic option for her.
After researching the market we came up with a lender that could help her. Interest rates always vary depending on specific circumstances but hers is fixed at 2.52% for life and the indictions are that her son will still receive a substantial inheritance at some point in the future.
She decided to raise some extra money so that she could sleep at nights knowing that she would be able to pay all her bills and within two months the mortgage was completed.
Not only is she now financially independent and sleeping well but she can always go back to the lender for more money if she feels the need.
Would you like us to help you sleep at night? It costs nothing to make an enquiry.
For more information please contact us.
Ancojada Limited trading as Prosperitas Consult is not authorised or regulated to provide financial advice.
All financial advice is provided by other regulated businesses.