Our experience tells us that this is one of the most rapidly growing sectors in the financial services industry and is becoming increasingly popular with people who are in the situation of being ‘property rich, but cash poor’.
Equity release allows you to release some of the value in your property, giving you the opportunity to enjoy your retirement after working hard for a lifetime. You can use the proceeds for almost any reason, i.e. to pay for home improvements, to clear oustanding credit commitments, to pay for the holiday of a lifetime, to buy a new car, or even to pass on an early inheritance to children or grandchildren.
There are three main types of scheme available:
Interest Only Mortgage
This is a loan secured against your home upon which you only need to make monthly interest repayments. Upon death, or at the end of an agreed timescale, the property is sold and the original amount borrowed is repaid to the lender.
This is the most popular form of equity release mortgage and is similar to an interest only mortgage, however, you do not have to make any repayments. A loan is secured against your home and the interest charged is ‘rolled-up’, thereby increasing the outstanding amount due. You retain full ownership of the property at all times*. Upon death (of the last applicant if a joint scheme is set up between a husband and wife), or upon moving into long-term care, the property is sold and the outstanding sum due is repaid to the lender. Any residue value remaining in the property passes back into the applicants estate.
Home Reversion Scheme
You sell part or all of your property to a lender in return for a sum of money. However, you retain the right to reside in the property for the remainder of your lifetime*. Upon death, the same rules apply as above.
Most schemes are covered by SHIP (Safe Home Income Plans), which ensures, amongst other things that you can never owe more then the value of your property.
Warnings – Equity Release is not suitable for everyone. Although Equity Release is a valuable way in which retired people can access some of the wealth they have locked up in bricks and mortar, the level of debt usually rises over time. Therefore, it can have a serious impact on your children’s inheritance and also on your ability to qualify for certain state benefits. You will lose the right to reside in the property if you enter a Care Home. A family meeting with a qualified adviser is always recommended before taking out an equity release plan.
EQUITY RELEASED FROM YOUR HOME WILL BE SECURED AGAINST IT.
*Assumes the scheme chosen adheres to the SHIP code of practice (Safe Home Income Plan).
DGS sometimes charges a Broker Fee for Equity Release, typically £350, however, we will discuss the level of the fee being charged with you before we begin to provide services.
To understand the features and risks of an Equity Release mortgage, please ask for a personalised illustration.
DGS has offices in London, Hertfordshire and the Midlands. We have a dedicated team of Independent Financial Advisers (IFA) and Chartered Financial Planners who can ensure you are receiving the right financial advice and the highest standard of service.
We also hold ‘Chartered Financial Planner’ status. To find out more about what that means for you, click here.
For a free consultation to discuss your Equity Release requirements together with any other financial needsContact Us today
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