Some people will be unsure how to begin the equity release procedure. Anxiety with proceeding with this form of borrowing could result in never receiving benefits from this excellent form of lifetime mortgage. Similarly, they also fail to consider certain important points which form an integral part of equity release schemes.
Equity release is basically the method of utilising the current value of your property to get a steady supply of cash. The cash may be received in a lump sum or in instalments.
Age is usually the major decisive factor while deciding the percentage value of the home which can be released. For instance, an older person looking for equity release is allowed to release a higher percent value of their home. However, a younger person will not be allowed to release the same value.
The following are some important points to mull over when opting for equity release:-
Age – As mentioned, age plays an important role while determining the percentage value of the home which can be released. Keep in mind that there is no maximum age limit as such when it comes to determining the percentage. For instance at age 55 which is the youngest possible age for equity release, themaximum release is currently 19%. As the age increases, so does the percentage.
As a consequence, the following are examples of maximum releases possible relating to a roll-up equity release scheme: -
Age 55 – 19%
Age 65 – 29%
Age 75 – 40%
Age 85 – 48%
Regulation - Lifetime mortgages and equity release are regulated and monitored by the Financial Services Authority. This came into effect after adverse publicity with regards to older equity release schemes which were the fore runners to todays plans. Therefore, in 2004 the lifetime mortgage market became regulated under the Financial Services Authority (FSA). Home reversions followed later & became regulated in 2007.
Choosing an equity release plan - If you are choosing an equity release plan, keep in mind that it should have a no negative equity guarantee. This is a requirement of SHIP (Safe Home Income Plans) that any equity release scheme currently a member must have this feature present within the plan. The no negative equity guarantee provides security that on eventual repayment, be it on death or long term care, the value of the debt can never exceed the property value. The worst case scenario would be that no equity will remain for the children, however at the same time no debt can be incurred.
Consideration of the above mentioned factors will help you immensely when choosing an equity release plan.
To discuss any of the features described above, or to ascertain how much you can borrow please call one of our equity release specialists on 0800 678 5159.
Altenatively, you can email firstname.lastname@example.org.