Equity Release Myth Busting

ARE THERE WAYS TO MITIGATE THE INCREASE IN BALANCE?

Yes, Equity Release loans can be very flexible and there are a lot of ways that you can mitigate the increase in overall balance. First of all, plans allow you the ability to repay the monthly interest, meaning that there will be no increase in the debt over the term of the loan.

There are also ways of paying off lump sums, If you have that ability, and usually you’re able to pay up to 10% of the original loan off throughout the term, without incurring any charges. If you are in a position to be able to repay any money, contact an advisor, like IMS first, to see if it is the most beneficial thing for you to do.

WHAT ABOUT THE ROLL UP OF INTEREST?

If you want to stop that from happening, you have the opportunity to repay the monthly interest charges. This will be discussed in the early stages of deciding whether Equity Release is the right option for you. It’s very important that you fully discuss all matters with your financial adviser in order to obtain the correct solution.

HOW DO YOU REDUCE THE DEBT?

Discuss the ability to pay off lump sums with your advisor, in terms of where the funds are coming from, how they should be used, how they can be used, and whether or not you are in a position to reduce that debt. You should consider whether there are any charges involved and do be aware that there may be early redemption charges, should you exceed the limit that you’re able to repay.

ARE EQUITY RELEASE RATES VERY EXPENSIVE?

It’s very important that you’re in a position to understand how this will affect your Equity Release borrowing at the moment. Equity release rates are currently the cheapest and most competitive they have been in years, however, please remember that as low as rates are, it’s still an expensive way to release capital and there may be alternatives. Again, it’s essential that you discuss everything with your adviser, as they will be able to give you the most suitable advice if you tell them everything they need to know.

IS IT TRUE THAT I’LL LOSE CONTROL AND OWNERSHIP OVER MY HOME?

No. Many people view Equity release as a form of selling their home with the right to remain in it. However, a Lifetime mortgage is just a form of borrowing against the property, like a normal mortgage, you will retain ownership, you will retain full control and nobody will be taking your home away from you so long as criteria and conditions are met.
I haven’t completely paid off my existing mortgage, can I look at Equity Release?
Anyone over the age of 55 would have probably been expecting to have paid off their mortgage, however we know that in reality, that’s not always the case. Equity Release can be considered, even if you have an outstanding mortgage.

WHAT ARE THE COMMON USES OF EQUITY RELEASE?

Equity Release is a very popular way of releasing the funds from your property for numerous reasons. Here are just a few of them: You can repay your outstanding mortgage, home improvements, supplementary income as you enter retirement, buying additional properties, or maybe even to pay for that long term care that’s needed.

WHAT IF MY CIRCUMSTANCES CHANGE DURING THE APPLICATION PROCESS?

We keep in touch with our clients throughout the entire process and will have numerous conversations before the Equity Release is decided upon. If circumstances change to a point where it’s no longer the correct transaction, we will recommend an alternative. We will never put anybody in a position where the advice would not be appropriate.

WHAT CRITERIA IS LOOKED AT FOR EQUITY RELEASE?

You need to be over 55 and the lender will look at your health. There may be ways of enhancing the rates or borrowing more if there are certain health conditions. What they don’t look at is the income of the client, whereas a regular mortgage is mainly focused upon that. The property is the main part of this transaction, and the main concern for the lender, who will have the property valued by a professional to make sure it’s adequate security for the purpose and the term of the loan.