Often your Equity Release plan can be transferred to a new property. However, any new property will need to meet the provider’s eligibility criteria and have a suitable valuation completed. If you or your spouse/partner need care after you have already taken out an Equity Release plan, this can have an impact on the care bills you are asked to pay by your local authority.
We look at the reasons why, and possible ways out of this difficult situation. In the case of home reversion plans you should get a lifetime lease to ensure you will never be forced out of your home. It exists to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart. A 55-year old can typically borrow up to 26% of a property’s value, (referred to as % LTV; Loan-To-Valuation) a 70-year old 45% and those aged 80 or over can raise around 55 – 58% of valuation. People with certain medical conditions, and / or lifestyle factors (e.g. smokers) can sometimes raise larger sums for their age, without needing to have a medical.
This can quickly increase the amount that is owed on your death or if you have to go into long-term care. Downsizing protection may be available, meaning that if you want to move, and apply to transfer your lifetime mortgage to a new property that doesn’t meet the provider’s lending criteria, downsizing protection can help. The Council promotes very high standards of conduct and practice in the provision of advice on Equity Release and to the characteristics of products.
Q Should I explore equity release when my two-year fixed-rate deal (on my 15-year repayment mortgage) comes to an end? I have a number of decent local authority and private pensions, and also £40,000 in additional voluntary contributions, which should cover any mortgage payment after retirement. If you own high-value real estate, releasing capital from the property which you can then invest elsewhere for a higher rate of return, can make a lot of sense.
Looking to whether Joseph expects interest in equity release and later life lending to continue, he said there is a ‘yes’ and ‘no’ element to this. He believes there is a simple fix to the above conundrum; ease the cost burden on older borrowers wanting to downsize, a stamp duty waiver for those downsizing by 30% plus has long been proposed. Another great example for using Equity Release is to raise money to give to your children or grandchildren.
The owner of a property valued at £500,000 has an outstanding mortgage of £400,000. When they marry, they decide to transfer half the property to their new partner. There is clearly scope for partnership development of equity release schemes bringing together central government, local government, the voluntary sector and the private sector. These schemes have proved of interest to people who do like the roll-up effect of interest on traditional equity release schemes. Put simply, if you’re over 55, Equity Release is a way of accessing the value tied-up in your home, without having to sell up and move out.
Fortunately, there is a body that was created specifically to protect you in equity release matters. Safe Home Income Plans , under the Equity Release Council, is a trade body with a strict code of conduct. If you go with a SHIP accredited company, you are basically covered against the worst possible practices. Your pension credits and other state benefits might be affected if your income or savings exceed the limits set by government.
