Equity Release

Asset Rich – Cash Poor

Equity ReleaseIf you are approaching retirement and can identify with the phrase “Asset Rich – Cash Poor” you may be considering raising some money by doing some kind of equity release scheme to access some of your wealth. There are two main types of Equity Release.

Lifetime Mortgages

With a Lifetime Mortgage you borrow a proportion of your home’s value. The interest is charges on the outstanding amount and this is rolled up over the period of the loan. None of the capital is being paid back, therefore the original amount borrowed plus interest which is compounded and rolled up grows until you pay it all off. This is usually when the surviving partner dies.

Home Reversions Schemes

With this type of scheme, you usually sell a share of your property to the investment provider for less than the market value.

You have the right to stay in your property for the rest of your life or until you go into a care home. When you die or move into a care home, the property is then sold. The investment provider gets the same amount of share back which the investor originally purchased plus whatever amount that share amount has grown to.

For example: if you sold 30% of your property to the provider, they would now get 30% of the property value at sale.

Warning

Equity release schemes may not be the best solution for you, you should consider other alternatives first.

You should always seek expert advice on these schemes, both with a financial advisor who specialised in this field, and legal advice from a solicitor.

Please call Jan on 01706 830678 for advice, or use our enquiry form.