A Quick Guide to Equity Release and FAQs

Anyone who has seen an advertisement about unlocking the capital in their home may have wondered what it entails and they may have questions that they would rather have answered at their own pace rather than over the telephone where they could feel rushed. This is quite common, so to help, we have put together some information that should answer the most commonly asked questions.

Who is Equity Release Designed to Service?

This varies with policy to policy, but there is usually a minimum age of around fifty years old. You would also need to be a homeowner as the equity is released from your home. It is paid either as a lump sum, as a regular income, or a combination of both so that you can make a large purchase, pay off debts and still receive money on a regular basis.

Do I Still Own my Home?

Anyone who receives money through an equity release scheme will still be the owner of the property and he or she can continue to live there. If you release equity, you are responsible for the upkeep of the home so that it does not deteriorate.

What are the Different Types of Equity Release Available?

In most cases, equity release will come as one of two products. The homeowner can decide either to take a ‘Lifetime Mortgage’ or ‘home reversion’. The Lifetime Mortgage is a loan that is secured against the value of your property in just the same way that a mortgage operates.

While you still own your home, you are expected to pay off the mortgage. The mortgage can be paid by selling your home when you die, or if you move to another location. A Home Reversion equity release scheme, means a portion or all of the value of your home is paid to you. You would no longer own your home, although you would be able to live there as a tenant.

Do we Need to Sell if one Person in the Marriage Dies?

Providing both partners are registered when the scheme is taken out, the original agreement will continue without change. If your home is only in one of your names, the property could be sold if the owner dies unless the remaining partner is able to pay the money owing on the property.

Is Equity Release Right for Everyone?

No two situations are the same, so each person has to weigh up the potential benefits based on their own circumstance. If there are repairs that need attention or there is a sudden financial crisis, equity release may be a suitable option. It can also help you afford some luxuries and improve your quality of life. This is a major influence for many people who have insufficient pension to pay for their lifestyle despite having worked for most of their lives.

Who Should I Contact About Equity Release?

As equity release schemes are regulated by the Financial Services Authority (FSA), any firm offering advice should be registered and they should display their registration details for customers to see. This is usually in small print on headed paper or at the bottom of any literature. The literature they present should be presented in an easy to read fashion and should not mislead readers in any way. Any scheme that is recommended to you by an equity release firm will have to meet your needs. It is considered a breach of FSA regulations for a company to recommend a scheme that is unsuitable to its customers.

Age Partnership equity release schemes are regulated by the FSA so any information supplied by them can be relied on.

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