Equity release mortgages are a great way to unlock the capital (cash) tied up in your home if you are an older homeowner. This type of mortgage can provide you with a lump sum in cash or regular monthly payments, which can be used for a variety of purposes such as paying regular bills, home improvements, care costs, etc. You can usually stay in your property for as long as you need and may even be able to move, provided the capital settlement company accepts the new property. The most popular form of equity release is a life mortgage, which allows you to free up capital in the form of a lump sum or a series of flexible payments. This capital is released as a loan against your property, which is usually only repaid when you die or receive long-term care.
The main advantage of this is that it gives you access to money now, rather than leaving it locked up in your house. This is especially beneficial for those who have seen their property values increase over the years, as they can use some of that money to supplement their retirement income. When considering an equity release plan, it's important to be aware of all the upfront costs involved. These typically include lender fees, attorneys' fees, and a commission paid to the capital release advisor who recommends the product. Additionally, it's important to bear in mind that taking out an equity release mortgage will reduce the amount of inheritance that your beneficiaries might otherwise receive. If you're thinking about taking out an equity release product, it's essential that you seek financial advice from an independent financial advisor.
Look for the Equity Release Council's approval mark to ensure that you're using a trusted provider. Additionally, make sure that your lawyer reviews the agreement with the capital release company before signing. It's also important to note that if you take out an equity release and have savings of more than 10,000 pounds sterling, your pension credit payments may be reduced or even eliminated. Similarly, if you receive state benefits, taking out an equity release could affect your eligibility to continue receiving them or to receive them in the future. However, disability benefits will not be affected by the release of capital. Overall, equity release mortgages can be a great way to unlock capital tied up in your home and use it for various purposes such as supplementing retirement income or financing necessary accommodations.
Just make sure that you understand all the costs involved and seek independent financial advice before proceeding.