EQUITY RELEASE IN ITS SIMPLEST TERMS.
Releasing equity from your house means borrowing money against the value of your home. You can use the money for various purposes such as:
· Home improvements, extension, solar panels, general upgrades
· Debt consolidation, cards, loans, mortgages
· Education, for yourself or children
· Start a new business
· Travel, freedom to go to places you have always wanted to visit
· Retirement, boost your retirement savings
However, you should be aware of the costs and risks involved in each option.
There are different ways to release equity from your house, depending on your situation and preferences. Some of the common methods are:
Downsizing: This means selling your current home and buying a smaller or cheaper one. You can use the difference in price to fund your needs. This option has the advantage of avoiding interest payments and fees, but it also involves moving costs, taxes, and emotional attachment to your home.
Remortgaging: This means taking out a new mortgage with better terms or a larger amount than your existing one. You can use the extra money to pay off other debts or spend as you wish. This option may offer lower interest rates and more flexibility, but it also extends your repayment period and may incur penalties or charges.
Retirement interest-only mortgage: This is a type of mortgage that allows you to pay only the interest on your loan until you die or move into long-term care. You can use the loan amount to supplement your income or cover your expenses. This option can help you stay in your home and maintain your lifestyle, but it also reduces your inheritance and may affect your eligibility for benefits.
Equity release products: These are financial products that let you access a portion of your home’s value in exchange for a share of its future sale proceeds. There are two main types: lifetime mortgages and home reversion plans. You can use the cash to spend as you like, and you don’t have to make any repayments until you die or move out. This option can provide you with a lump sum or a regular income, but it also reduces your equity and may have high fees and interest rates.
HOW MUCH CAN I RELEASE?
The amount of equity
You can release from your house in the UK depends on several factors, such as:
The value of your home and how much you still owe on your mortgage
The method of equity release you choose, such as remortgaging, lifetime mortgage, or home reversion
The terms and conditions of your lender or provider, such as the maximum loan-to-value ratio, interest rates, fees, and eligibility criteria
Your personal situation and preferences, such as your age, income, goals, and needs
You can usually release between 20% and 60% of the value of your home, but the maximum amount will vary depending on your circumstances. For example, if your home is worth £300,000 and you owe £150,000 on your mortgage, you have £150,000 of equity in your home. If you can borrow up to 80% of your home’s value, you could release up to £90,000 of equity (£300,000 x 80% - £150,000).
However, releasing equity from your home is not a decision to be taken lightly, as it can have significant implications for your finances, your property, and your inheritance.
Equity release is not for everyone. Before you decide to release equity from your house, you should consider your financial goals, needs, and circumstances. You should also seek independent advice from a qualified professional, such as a financial adviser.
If you feel you have been mis-sold equity release you should contact Claimline Legal on 0800 779 7457 or go to www.missoldequityrelease.co.uk
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