Don’t fall for the equity release myths
More and more UK homeowners over the age of 55 are using their property wealth to fund their later-life ambitions, tax-free. However, there are still many myths surrounding equity release that don’t reflect the modern regulations.
A Lifetime Mortgage is a specialist mortgage that allows you to release a portion of your home’s value as a tax-free cash lump sum. You can use the money however you wish, whether that is home improvements, gifting an early inheritance, or funding large purchases. There are no monthly repayments to make, with the loan and interest usually being cleared by the sale of your home after you either pass away or enter permanent long-term care.
A Lifetime Mortgage is the UK’s most popular type of equity release and has never been safer. Some of the most pervasive myths are debunked here:
- Some believe that to release equity from your home requires you to sell it to a lending company. When taking out a Lifetime Mortgage however, you will be guaranteed to remain the sole legal owner of your property. Your home remains yours for your lifetime.
- Some may also say that you can’t release equity from your home if you have an outstanding mortgage. This too is incorrect, as provided you clear any existing mortgage upon completion of your Lifetime Mortgage application you can release equity. Indeed, many people use their tax-free sum to achieve this.
- As there are no required repayments, some believe that the interest will eventually lead to you owing more than the value of your home. Provided that your lender is approved by the Equity Release Council however, you will benefit from the no-negative equity guarantee, ensuring you will never owe more than your property is worth.
- Many people release equity from their home to meet their retirement needs, but still wish to leave their loved one’s an inheritance. It is absolutely possible to release equity from your home without putting your loved one’s future inheritance at risk. With the increasing popularity of equity release has come an increased flexibility. There are plans that allow you to make voluntary repayments towards your loan, or even give you the ability to ringfence a portion of your home as a guaranteed inheritance.
If you are considering releasing equity from your home, then it is essential to seek professional financial advice. Taking money from your estate now means there will be less available to your heirs in the future and could have an affect on your entitlement to means-tested state benefits.
If you are interested in releasing equity from your home, contact Age Concern Liverpool & Sefton on 01704 542 993 and we will put you in touch with our equity release experts.
This is a Lifetime Mortgage which may impact the value of your estate and could affect your entitlement to means-tested state benefits. Responsible Equity Release is a trading style of Responsible Life Limited which is Authorised and Regulated by the Financial Conduct Authority and entered on the Financial Services Register under reference 610205. Only if your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,295.