Cornwall LivingIssue #70
Planning for your future
With the help of Harris Begley Financial Planning, we look at some examples of how Equity Release could deliver a solution to unforeseen financial problems.
People consider Equity Release for a number of different reasons. It may be a change in personal circumstance, a desire to travel or perhaps to make improvements to the home. Whatever the reason, it pays to take advice from a financial advisor, and one who is a member of the Equity Release Council.
“…the loan will be paid off and the couple can enjoy their home improvements…”
A couple in their late 60s have been spending more and more time at home since they retired. They enjoy having friends and family over, and looking after their grandchildren. They’ve lived in their current home for over 20 years. They’ve decided that they would like to make some home improvements – a new kitchen, as wear and tear over the years had left its mark – and also think that one of their bathrooms has become a bit dated and want to upgrade it. Although they both receive state and private pensions, they don’t have a lump-sum to pay for these improvements. They’ve considered borrowing money from their children, but decided against it as the children were already stretched paying for childcare and school fees.
What are their options? Steve Rusga, Equity Release Specialist from Harris Begley, explains: “I would speak to them about a interest only lifetime mortgage with the option to make regular or ad hoc capital repayments, as they need a lump-sum upfront, but are able to afford to pay off all of the interest and some of the capital back each year. This means that, in time, the loan will be paid off and the couple can enjoy their home improvements, in the knowledge that they wouldn’t have lessened the inheritance for their family through roll-up.”
Regaining financial control
Not all financial scenarios are happy ones and the unexpected death of a partner can leave the surviving spouse with unexpected debts, such as credit card bills or lack of funds due to reduced pension payments. How can a financial advisor help? “A lifetime mortgage is a way to consolidate unsecured debt,” says Steve. “By taking a lifetime mortgage which allows ad hoc payments, credit card debts can be paid off in full, enabling clients to regain control of their finances. By then making regular interest payments on a lifetime mortgage loan, the mortgage balance level can be maintained, so protecting any inheritance.”
These scenarios are anonymised versions of typical situations that clients may face.
Understandably, this is a complex area, but one where a specialist such as Harris Begley Financial Planning can help, so it’s worth getting in touch to find out more.
For advice on Equity Release contact Steve Rusga, Equity Release Specialist at Harris Begley Financial Planning on firstname.lastname@example.org
You may also require advice on the legal and tax issues.
HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.
The value of pensions and investments can fall as well as rise. You may get back less than you invested.
"...the loan will be paid off and the couple can enjoy their home improvements..."