It has been a busy year for the later-life lending market, with the introduction of L&G’s Income Lifetime Mortgage, the increasing numbers of Lifetime Mortgages on the market and record-breaking numbers of over-55s turning to specialist financial products to bolster their finances.¹ ²
It is no surprise that with a backdrop of historically-low interest rates and economic uncertainty, more and more people are turning to their homes for a timely boost.
Long-term growth in the value of UK property means that if you are asset rich but cash poor, you might be able to utilise your home for a helping hand in later life. For many homeowners, their property represents their most significant financial asset, which, after years of growth, might outstrip their pensions or other savings and investments. If this is true for you, then you could explore all of your options when planning your financial future.
However, given the unprecedented range of products and features available it can be difficult to know what is right for you and your family. It can be hard to distinguish between products and all their unique strengths and drawbacks. You may want to raise finance for a whole raft of reasons including making home improvements, indulging in dream holidays or to help loved ones get on the property ladder. So, it’s important to match the product to your individual needs.
To help you understand the difference between the new Income Lifetime Mortgage and the existing types of Lifetime Plans, here is a brief explanation.
Income Lifetime Mortgages: If you feel like you miss or require the monthly discipline of a salary, then an Income Plan could provide the best outcome for you. In a similar way to the other Lifetime Mortgages, you decide how much equity you would like to convert, but your money comes in fixed monthly increments, like a salary. You can choose the length of the term in five-year intervals, from five, all the way up to 25 years. This enables you to use your home as a supplement to your disposable income and can be a great way to maintain your lifestyle deep into retirement.
Lifetime Mortgages: What many over-55 homeowners are finding is that after years of making monthly repayments, they want to be free of them. If you are looking to raise capital in later life then releasing equity can be an option, particularly if you are struggling to meet the affordability criteria for a mortgage. By taking out a Lifetime Mortgage, you can access a portion of your home’s value as tax-free cash now. Better yet, you will remain the full legal owner for life and there are no monthly repayments required.
The primary considerations when releasing equity are that it may reduce the value of your estate in time and could affect your entitlement to means-tested state benefits.
An adviser can provide you with a personalised illustration, so you can explore plans that allow you to control the impact of a Lifetime Mortgage on your estate.
Remember, unlike equity release plans of yesteryear, all plans from Equity Release Council approved lenders come with no-negative-equity guarantee.
So, you can never owe more than the value of your home and cannot pass on a Lifetime Mortgage debt to your estate. Not only this, there are a range of options for you to choose from that allow you to downsize without penalty and leave a guaranteed minimum inheritance. These customer-focused safeguards are designed to shift the risk onto the lender, giving the borrower peace of mind.
If you are looking for guidance on how your home’s value could help you achieve your goals, then we at Responsible Equity Release are on hand to answer any questions you may have. Why not have a free, no obligation, discussion with a member of our expert Information Team today on 0800 756 3958? They are looking forward to getting to know your situation and addressing any questions you may have. Alternatively, if you’re not ready to have a conversation you can find out just how much tax-free equity you can release now using our quick online calculator.
Who is Responsible Equity Release?
Savings Champion has partnered with award-winning equity release specialists Responsible Equity Release.
Responsible Equity Release have been providing the nation’s homeowners over 55 with quality later-life financial solutions since 2010.
Like us, they are passionate about what they do and combine modern financial solutions with good old-fashioned customer service.
Responsible Equity Release have a nationwide team of equity release experts on hand, ready to discuss your needs and wants for your financial future.
All the providers they recommend are approved by the Equity Release Council, meaning that all customer-focused safeguards come as standard.
Giving you the peace of mind to enjoy the comfortable retirement you deserve. With free, no obligation advice and personalised illustrations, they can help you find the Lifetime Mortgage that will match your later life ambitions.
This expertise is vital, as accessing some of the equity from your home with a Lifetime Mortgage may affect the value of your estate and your entitlement to means-tested state benefits. Plans are available that can help you to mitigate these impacts.
Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference 610205. Only if case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,490.
You might also like...
@savingschampion
Find us on Facebook