Unlocking the potential of your home through equity release can be a significant step towards achieving your financial goals. However, it can seem like a complex subject at first, meaning many people may not realise it could be a viable option for them.
Whether you’re hoping to free up funds for home improvements, want to supplement your retirement income, or wish to support another significant expense, equity release can be a versatile tool in financial planning.
Nevertheless, it’s vital to consider the impact on your estate’s value and potential inheritance.
Seeking professional financial advice from experts like our friendly team at MAP Finances can help ensure that equity release is the right choice for you. We’ll make sure that any action you take aligns with your overall financial goals and circumstances.
With that said, let’s take a closer look at equity release and how it may benefit your finances.
Please note that this blog article is for informational purposes only and does not constitute financial advice. Speak with one of our professional financial advisers for guidance tailored to your unique situation.
What is equity release and how does it work?
Let’s start by looking at exactly what equity release means.
Equity release is a financial mechanism that allows homeowners to access the value tied up in their property without the need to move out. Essentially, it involves borrowing against the equity of your home while retaining ownership.
There are two main types of equity release:
- A lifetime mortgage: This is a loan secured against your home, where you can choose to make repayments or let the interest roll up. The loan and any accrued interest will then need repaying when your home is sold. In many cases, this will be when your child or another family member sells it on. Learn more about lifetime mortgages.
- Home reversion plans: These involve selling a portion of your property to a provider for a lump sum or regular payments while continuing to live in the property rent-free. At MAP Finances, we can help you navigate both full and partial home reversion plans.
What are the benefits of equity release?
Equity release offers several clear benefits, making it an appealing option for financial flexibility in later years. It allows you to access a source of income or a lump sum from the value of your home, without the need to sell or move out. This feature is especially valuable for those wishing to stay in their homes while needing extra funds for renovations, daily living expenses, or enjoying a more comfortable retirement.
Equity release can also play a key role in your financial planning. It offers a practical solution for managing debts, covering long-term care costs, or providing financial support to family members, such as contributing to a grandchild’s first home purchase. By tapping into the equity of your property, you can improve your quality of life without altering your living situation.
An important aspect of many equity release plans is the no negative equity guarantee. This ensures that you will never owe more than the value of your home when it’s sold, protecting your estate from any potential debt caused by the equity release. This guarantee offers security and peace of mind, ensuring that the decision to opt for equity release is both safe and beneficial for your future.
Who is eligible for Equity release
Eligibility for equity release mainly depends on your age and the value of your property. Homeowners over the age of 55 with a property worth at least £70,000 could be eligible for a lifetime mortgage.
The amount you can release also depends on several factors, including your age, the value of your property, and your health.
It’s essential to consult with a financial adviser to understand the specific requirements and make sure that equity release is suitable for your situation.
Is it possible to sell a house with equity release?
Selling a house with an equity release plan in place is indeed possible — but there are some considerations to keep in mind.
- The equity release must be repaid from the proceeds of the sale. Depending on the type of plan and the amount owed, this can impact the remaining funds available to you after the sale.
- If you’re moving to another property, it may be possible to transfer your equity release plan, subject to the new property meeting the lender’s criteria.
It’s important to have a clear understanding of your equity release plan’s terms and conditions and to speak with your financial adviser before making any big decisions about selling your property. Feel free to get in touch with our team for support.
Get the financial advice you need with MAP Finances
At MAP Finances, we believe in providing tailored financial advice to help you navigate the complexities of equity release and any other financial decisions. Our expert advisers are dedicated to ensuring you understand all your options, so you can make choices that best fit your financial planning and long-term goals.
Whether you’re considering equity release, looking for mortgage services, or seeking advice on savings and investment, we’re here to support you every step of the way. Email or give us a call to see how we can help.
