For most retiree’s, property is often their biggest asset and as a result of poor pension provision and an increase in housing prices, more and more of our elder population are becoming asset rich and cash poor.
Equity release gives people aged 55 and over who have money tied up in their home the ability to release equity from the property without having to sell it or make monthly repayments. The homeowner can decide to take a lump sum or draw down smaller regular amounts (or a combination of both) from the value of their house whilst still residing in it. For many this can also be an option to repay an interest only mortgage.
AdviserLoan offer a range of Lifetime Mortgage solutions whereby clients can take out a mortgage on their property (provided it is their main residence) and still retain ownership. We do not currently offer Home Reversion Plans.
A lifetime mortgage can be an excellent option for clients looking to raise money to subsidise their retirement income, repay an interest only mortgage, fund home improvements, provide a house deposit for their children or simply tap into their asset wealth to allow them to enjoy their later years in whichever way they wish.
- You can protect some of the value of the property as inheritance for family
- Many offer the option to make repayments or at least service the interest
- Most allow the interest to roll up if required (loan amount and any accrued interest is repaid upon death or moving into long term care) this option means the applicants are required to make no payments if they wish.
- Right to remain in the property until you die or move into long term care
- Only pay interest on amount withdrawn
- No Negative Equity Guarantee (Client or their estate will not be liable for any negative balance on the loan once the property is sold)
- Some lenders offer the right to move to another property
*(t&c’s apply to all of the above)
There is a lot of strict criteria involved in the process of a Lifetime Mortgage, but here are a few of the key points:
- Available to individuals aged 55 and over
- Borrow between 20% and 50% of the value of your property dependant on age.
- Enhanced rates available for applicants with certain health conditions
- Interest rates are fixed or capped variable
- No fixed term
- An attorney can act on behalf of an applicant if the homeowners have lost mental capacity providing they have the required permissions and are acting on the best wishes of the applicants
- Early repayment charges can be fixed or gilt linked
- Downsizing protection
Is equity release the right option for your client?
As much as a lifetime mortgage can be the perfect solution for many, there are a few alternatives to consider first and are key questions in determining whether the product is the right option for them, these include the following:
- Would your client consider taking in a lodger?
- Would downsizing be an option for your client?
- Are your clients eligible for any state benefits or local authority grants?
- Can your clients use investments or savings?
- Do your clients have a family member that could help?
Adviserloan are experts in the field of lifetime mortgages not only in researching the right product for your client but in their expert customer service and “nothing is too much trouble” attitude.
We will help your client throughout the process and can provide a face to face meeting with your client if this is preferred, which in our experience is highly beneficial when explaining this type of product and ensuring your client fully understands both the benefit and implications of a lifetime mortgage.
We will also keep you up to date with the progress of your clients case throughout the process and will only discuss the product in question with your client.