AT a time when there are currently three million over 55’s that have yet to repay their mortgage, over a quarter of people who unlock equity release from their home do so to repay an existing mortgage*
Stephen, 66, and Sian, 65, had hoped to repay their mortgage with the returns on some investments, but unfortunately, they came up short.
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“We remortgaged to an interest-only mortgage some time ago but had been unable to repay it,” they said.
“Having worked in financial services for over 40 years, I was aware of all the mortgage options in the market and equity release seemed a perfect solution.
“The only reservations we had were whether we had enough equity in the property which would allow us to borrow enough to repay the outstanding mortgage.
We contacted Age Partnership as we were aware of their market reputation, and they instilled confidence in our initial conversations with them.
“The decision to proceed with equity release has proved to be a good one, we are able to make regular payments to the lender to reduce the outstanding balance, which is a real bonus.
“We also feel comfortable that we can now stay in the home that we love and have worked hard to maintain, both the house and the garden, for the rest of our lives.”
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Could equity release be right for you?
Equity release is a way for homeowners aged 55 and over to unlock the cash, known as equity, from their property.
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The amount you can unlock depends on the value of your property and the age of the youngest homeowner.
Once any existing mortgage has been repaid, which is a condition of equity release, the money you release is yours to enjoy spending.
That could be on home improvements, a new car or providing a financial gift to loved ones.
By far the most popular type of plan is a Lifetime Mortgage, which allows you to continue owning 100% of the home you love.
You can choose how you want to access the cash you unlock, either as a lump sum or over regular smaller instalments.
Plus some equity release plans don’t require any regular repayments so you have the freedom to choose when to make repayments.
There are also other types of equity release plans which might be more suitable for your needs, and it’s a requirement that you take advice before proceeding with equity release.
A specialist broker can discuss all the options available to you, including what impact it could have on the size of your estate over time, as equity release will decrease this, and if your entitlement to current and future means‑tested benefits may be affected.
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How does equity release work?
When you pass away or move into long-term care, your house is sold and the loan, plus accrued interest, is paid off with the remaining money passing to your estate.
However, some plans now allow the interest or part of the loan to be repaid earlier to lower costs.
With these plans, you can make voluntary payments subject to certain limits. Early repayment charges may apply above a set value.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and will reduce the value of your estate and impact funding long-term care.
To understand the features and risks ask for a personalised illustration.
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We provide initial advice for free and without obligation.
Only if your case completes would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply.
*Age Partnership Reasons to Release Data,H1 2023
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Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.
