Equity Release – Loans for Senior Homeowners
If you’re an older homeowner and have been refused credit, you could qualify and benefit from an equity release plan with no monthly repayments. These plans have lasting consequences for you and your family, which is why they must be discussed with a professional financial adviser first.
What is equity release?
Equity release is a method of borrowing for senior homeowners who may not be able to secure other types of credit due to their age and working status (e.g., retired).
There are two types of equity release in the UK, namely:
- Lifetime mortgage
- Home reversion plan
Lifetime mortgages
A lifetime mortgage allows senior homeowners with no debts secured against their residential property to access some of their home equity as a tax-free lump-sum or drawdown loan with no monthly repayments – unless volunteered.
Lifetime mortgages (continued)
The lifetime mortgage is charged with compounded interest each month, but the principal loan and all accumulated interest are only repaid when the last surviving homeowner named on the plan either passes away or moves into long-term care. It’s repaid by selling the property and using some or all of the sale proceeds to repay. There are guarantees in place, including the prevention of owing more than the property sells for.
Home reversion plan
Home reversion plans are also available to senior homeowners who own 100% of their main residential home. These plans enable the homeowner(s) to take some of their equity as a tax-free lump-sum loan or drawdown loan with no monthly repayments.
Home reversion plan (continued)
No interest is charged on the loan, but the homeowner must agree to give the lender a percentage of the property’s future sale value. For example, you might take 30% of the property’s current market value as a lump sum, but agree to give the lender 60% of the property’s future sale value. The property is only sold to repay when the last surviving homeowner named on the plan passes away or moved into aged care.
Who can benefit from equity release?
Equity release is available to homeowners who are at least 55 years old and own 100% of their own residential home and plan to continue living there. There may be other eligibility criteria regarding the property, including its value, construction, location and design.
Equity release is a method of borrowing in later life, which can be used for an array of purposes, not limited to:
Who can benefit from equity release? (continued)
- Home renovations
- Retirement funding
- Holidays
- Gifts for family
- Private medical expenses
Use a financial adviser before choosing equity release
Reputable equity release providers are a member of the Equity Release Council. The Equity Release Council’s code of practice states that all providers must provide face-to-face equity release advice before proceeding due to the seriousness of these products.
Equity release is a big decision with lasting consequences for you and your estate beneficiaries. It can also affect your entitlement to state benefits and have tax implications when the money is gifted to loved ones. Getting the correct information and a clear understanding is essential from the beginning.
Book your equity release consultation
Book an equity release consultation with a Taylor James financial adviser today. We have helped many clients to clearly understand the pros and cons of equity release, allowing them to make an informed and confident decision.
Call us today for a no obligation chat about planning your financial future.
Call: 0203 859 3320
Email: contact@taylorjamesfs.co.uk
Please note:
- Equity release, lifetime mortgages & home reversion plans will reduce the value of your estate and can affect your eligibility for means tested benefits.
- Taylor James Financial Services are unable to advise on home reversion plans.
FAQs
Mortgage advice is provided by qualified financial advisers to help the client find and secure the most suitable loan to buy residential or investment property. The mortgage adviser will take into account the client’s individual circumstances to discuss mortgage options. The adviser will then search the mortgage market to identify real-time suitable options and make an application. Thus, mortgage advice usually includes mortgage brokering services to provide a holistic and convenient service from start to finish.
There are several benefits of using a mortgage adviser. A mortgage adviser can provide clarity to clients which should make the process of getting a mortgage more efficient and less stressful in some cases. They can also help people with unique situations find options when the client may have believed it impossible. Moreover, the mortgage adviser could ensure the client secures the most beneficial type of mortgage for their situation and preferences, perhaps avoiding costly mistakes. Some mortgage advisers can secure better rates and deals due to their connections.
Mortgage advisers can help people seeking a mortgage with bad credit in different ways. Our advisers can provide advice to clients on how to improve their credit rating and therefore improve their chances of getting accepted for a better mortgage deal. We can also search for lenders that are more willing to provide credit to applicants with a below-average credit history. Every situation is different and there are never any guarantees but we have helped people with bad credit to get a mortgage. Speak to our team to learn more.
Taylor James welcomes all clients to use our mortgage advice services, including those that may have unique situations. Whether you have multiple income streams or other complex issues regarding pay and employment, it’s unlikely that we won’t have seen your situation before. Our advisers can assist in finding the right lender swiftly, including support regarding providing evidence and other possible application process hurdles. Don’t put off seeking a mortgage due to a non-standard situation and speak to our team today.
FAQs
Mortgage advice is provided by qualified financial advisers to help the client find and secure the most suitable loan to buy residential or investment property. The mortgage adviser will take into account the client’s individual circumstances to discuss mortgage options. The adviser will then search the mortgage market to identify real-time suitable options and make an application. Thus, mortgage advice usually includes mortgage brokering services to provide a holistic and convenient service from start to finish.
There are several benefits of using a mortgage adviser. A mortgage adviser can provide clarity to clients which should make the process of getting a mortgage more efficient and less stressful in some cases. They can also help people with unique situations find options when the client may have believed it impossible. Moreover, the mortgage adviser could ensure the client secures the most beneficial type of mortgage for their situation and preferences, perhaps avoiding costly mistakes. Some mortgage advisers can secure better rates and deals due to their connections.
Mortgage advisers can help people seeking a mortgage with bad credit in different ways. Our advisers can provide advice to clients on how to improve their credit rating and therefore improve their chances of getting accepted for a better mortgage deal. We can also search for lenders that are more willing to provide credit to applicants with a below-average credit history. Every situation is different and there are never any guarantees but we have helped people with bad credit to get a mortgage. Speak to our team to learn more.
Taylor James welcomes all clients to use our mortgage advice services, including those that may have unique situations. Whether you have multiple income streams or other complex issues regarding pay and employment, it’s unlikely that we won’t have seen your situation before. Our advisers can assist in finding the right lender swiftly, including support regarding providing evidence and other possible application process hurdles. Don’t put off seeking a mortgage due to a non-standard situation and speak to our team today.