Cornwall LivingIssue #101
Unlock your retirement
Three things you might not know about Equity Release, from the team at Harris Begley.
Each year, older homeowners use Equity Release to help access millions of pounds to fund their retirement, and why not? As property prices have risen significantly and time spent in retirement gets longer, as you might expect, it’s becoming an increasingly popular option. The term usually refers to a Lifetime Mortgage, that is, a mortgage secured against your home to release funds which are typically paid back when you pass away or move into long-term care. If you think Equity Release could be for you, here are three important things you may not know about it, to help inform your decision.
1. You can make more than one withdrawal
While it is possible to take a single lump sum using Equity Release, it isn’t the only option. Depending on your lifestyle and goals, it may make more sense to make several smaller withdrawals over a longer period. Known as a ‘Drawdown Lifetime Mortgage’, this can provide more flexibility and act as a cash reserve for unforeseen events, if needed. However, you must bear in mind that further withdrawals will reduce the equity you hold in your home and increase the level of interest owed on the loan.
2. You have the right to remain in your home
Not wanting to move home is often a reason people consider Equity Release. It’s a product that can release funds without having to downsize, however, a common concern is that a lender would be able to force them to move out, but this is not the case when choosing a plan that meets the standards of the Equity Release Council. Borrowers have the right to remain in their home until the end of the loan. This is usually when you die or your property is sold to fund long-term care.
3. You don’t have to own your home
You don’t have to own your home outright to be eligible for Equity Release. If you’re still paying a mortgage, some of the money you draw down will be used to pay off the remaining debt, meaning the amount accessible to you will be lower. Usually, you can borrow up to 60% of the value you own, but lower restrictions may apply depending on the lender. In fact, you can use Equity Release to pay off mortgage debt you may have as you enter retirement. It’s a step that can reduce outgoings at a time when your income may decrease.
Before moving forward with Equity Release plans, you should assess your wider financial situation, as there may be other assets that can help you achieve your goals without the drawbacks of a Lifetime Mortgage. With that in mind it makes sense to contact Harris Begley to discuss your aspirations and the options available to you.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Equity Release will reduce the value of your estate and can affect your eligibility for means-tested benefits.
Harris Begley Financial Planning
Savoy Court, Causewayhead, Penzance TR18 2SP
Health & Wellbeing Innovation Centre, Treliske,
Truro TR1 3FF