Cornwall LivingIssue #77

Unlocking your future

Could equity release be the key to unlocking yours? Cornish equity release specialist Giraffe provide honest, expert advice in this growing area of personal finance.

With the advent of new regulations and a modern breed of advisors, it’s clear to see the benefits of today’s lifetime mortgages, as we found out when we met with Giraffe’s owners, Andrew Johnson and Ashley Miller. Both experienced financial advisors, Ashley’s background is in retail management before a move to financial services nine years ago. He spent some time working for a ‘corporate’ before setting up his own, independent mortgage advice company. Andrew spent five years with Coutts as a wealth management specialist before the draw to his homeland proved too much. Growing up together in Falmouth, Andrew and Ashley have been friends since school, and joined forces to launch Giraffe after identifying a gap in the market for a company in Cornwall that focuses solely on equity release. The products of the past compared to those available now are like chalk and cheese, with providers now having to adhere to much more stringent regulations. With this in mind, we were keen to find out from the experts how our readers could benefit:

What exactly is equity release?

“Equity release refers to a range of products that could let you access the equity (cash) tied up in your home if you are over the aged 55 or over. You can take the money you release as a lump-sum or, in several smaller amounts or as a combination of both. Here at Giraffe we can provide advice on all equity release products, although focus on lifetime mortgages, as these allow you to maintain ownership of your home, which is something we feel strongly about,” explained Andrew.

Ashley added: “modern lifetime mortgages give you the option to either pay the interest so you know exactly what your outstanding balance will be or let the interest ‘roll up’ if you don’t want to make any regular payments – it’s totally up to you. Rolling up means that the interest will be added together until the end of the mortgage, usually on death or permanent vacation of the property. If you prefer your children, or family, can also choose to pay the interest throughout the term, so reducing the erosion of any inheritance. Due to new regulations, you will never be left with negative equity, meaning any beneficiaries to your estate will not be left out of pocket.”

When and how much equity can I release?

Andrew explained that equity release is available to those 55 and over and usually until the age of 85. The percentage you can release depends on a combination of both your age and the value of your property. “Here at Giraffe we run an ethical model and will explore a number of alternatives before offering equity release – for example the product isn’t always suitable for those at the younger end of the spectrum and sometimes we can offer a ‘normal’ mortgage as a better solution,” said Ashley. “Even though Giraffe solely deals in equity release, as financial advisors we are there to ensure our customers have the right product for them and if we think equity release isn’t suitable we will say so.” We also found out that there are various options when it comes to how you take your money. You arrange an amount to release that can then be taken either as a lump sum, a drawdown (where you can take funds as and when you require them) or a combination of the two. This has the benefit that you’re not paying interest on the whole amount and have the freedom to take part now and part later.

Why would I need to consider
equity release?

Andrew told us: “There are many people who haven’t planned their pension requirements adequately, are only receiving a state pension but have a high amount of equity tied up in their home.” For this demographic, releasing equity to provide a bit more cash to live on day to day can prove invaluable. Some of Giraffe’s clients release equity from their homes as a way of helping their families financially in advance of their death. For example, grandparents may want to help their grandchildren with university fees, buying their own car or to help their children get onto the first rung of the property ladder. Others might want to pay off an interest only mortgage that is coming to an end or to simply release some money so that they can enjoy their retirement.

What does Giraffe offer its customers?

Ashley explained that: “we are here to educate and help our customers understand that equity release no longer has the stigma attached to it that it once had. Andrew and myself are always at the end of a phone – there are no call centres here! We love to talk to our customers and, although we have offices in Truro, we are very happy to visit people in their own homes. There is no charge for these visits and any fees are only payable once the mortgage is finalised. We are also totally independent so, unlike larger companies who may be tied to a specific few lenders, we can offer advice on a much broader range of products.” Giraffe has an excellent website where you can find out more, including a sophisticated equity release calculator so that you can see at a glance how much you might be able to release.

"modern lifetime mortgages give you the option to either pay the interest so you know exactly what your outstanding balance will be or let the interest ‘roll up’ if you don’t want to make any regular payments - it's totally up to you"