Ten Things You Need to Know About Equity Release (Lifetime Mortgages)

Many people are turning to Equity Release to unlock the real value in their homes. Through equity release, people are able to more fully enjoy their retirement. These are ten points that you should consider about Equity Release and Lifetime Mortgages.

ONE: The Lifetime Mortgage (also known as an Equity Release Mortgage) is a special mortgage product. Some schemes offer this service to the over-55s and others only to the over-60s or even 70s. Ask your IFA about Equity Release for professional advice to help you make your decision.

TWO: When you take out a Lifetime Mortgage, you can benefit from unlocking the financial value in your house by borrowing against the equity in your home.

THREE: The equity in your home can be released to you as a lump sum or as a regular income when you take out this kind of mortgage.

FOUR: A Lifetime Mortgage is secured against your home, but there are no repayments made by the borrower and you can still live in your home for as long as you like.

FIVE: The minimum property value differs from scheme to scheme but is usually around £80,000. In order to qualify for this product, your home will have to be in a reasonable state of repair and you will need to keep the property in a good state of maintenance. Since you still retain full ownership of the property, all maintenance and repair costs are down to the homeowner.

SIX: Whilst a Lifetime Mortgage is an excellent product for many over-55s and 60s to benefit from, it's important to weigh up the pros and cons relative to your own personal circumstances. Always talk your decision over with a family member or good friend before you take out a lifetime mortgage.

SEVEN: You may be able to borrow a maximum of between 20 and 40% of the value of your home. Each scheme will differ, but you should only plan to borrow the maximum is you need it all. If you feel that you may need access to more cash later, why not talk to your IFA about other similar options?

EIGHT: Remember that there are other ways to raise funds when you need them and that Equity Release is not the only option. Talk through your options with an experienced IFA. You should ask your Independent Financial Advisor for a full breakdown of the total cost when taking out a Lifetime Mortgage.

NINE: Interest is added to the loan but this is not repaid until your home is later sold by your family and the entire mortgage is paid back after your death.

TEN: A Lifetime Mortgage can reduce the inheritance tax that your family have to pay after your death. This way Equity Release can save your loved ones money.