The Range of Equity Release Products Available to you.

The Lump Sum Lifetime Mortgage has similarities to the mortgage most people have had during the course of their lives except in this case there is no fixed end-date or term, in the case of all Lifetime Mortgages, the end-date or term will be triggered with the death or entry into long-term care of the last surviving homeowner.

Your property is independently valued by a qualified chartered surveyor. On receipt of a suitable valuation the equity release lender then agrees to lend you a ‘tax-free’ lump sum which can be spent as you wish. Compound interest is added to the mortgage until the plan comes to an end. The interest applied is usually at a fixed rate of interest although variable rates are also available should they be deemed more appropriate. This loan is secured against your property in the same way as a conventional mortgage.

Typically, there are no monthly repayments to be met with your Lump-Sum Lifetime Mortgage although many Equity Release schemes are very flexible and will allow you to pay the interest monthly or allow a voluntary partial repayment up to 10% of the initial sum borrowed per year without any penalty. If you choose to make monthly interest repayments it will have the effect of stopping compound interest being added and if you choose to make lump sum or ad hoc repayments it will reduce the sum owed over time as the interest and part of the borrowed capital will have been repaid.

On the death or entry into long-term care of the last surviving homeowner the property can then be sold by your nominated executor to repay the loan.  If sold, any surplus money then goes back into your estate to be shared by the beneficiaries as per the terms of your Will. If your designated beneficiaries want to retain the property for their own use they can repay the loan from other more conventional means such as a conventional mortgage or loan.

The Drawdown Lifetime Mortgage is exactly the same as the ‘Lump-sum’ Lifetime Mortgage mentioned previously. In this case, the lender agrees to lend you a smaller ‘lump sum’ initially plus a reserve or drawdown facility which can be used at a later date, either all at once or in smaller slices.

The initial release and any subsequent drawdowns are charged at a fixed rate of interest although again, variable rates are also available should they be deemed more appropriate for you by your adviser. The funds taken from the draw-down facility will normally be fixed for life too and charged at the prevailing rate of interest offered by the lender at the time of the draw-down.

Again, some Equity Release schemes allow you to pay the monthly interest or voluntary ad hoc repayments up to 10% of the initial sum borrowed per year (and 10% of any additional borrowing from the reserve) without any penalty. If monthly interest repayments are employed by you it will have the effect of stopping compound interest being added to the loan and if you make voluntary or ad hoc lump sum repayments it will reduce the sum owed over time as the interest and part of the borrowed capital are being repaid.

As with the ‘Lump sum’ Lifetime mortgages on the death or entry into long-term care of the surviving homeowner, the house can then be sold to repay the loan. If your designated beneficiaries want to retain the property for their own use they can repay the loan from other more conventional means such as a conventional mortgage or loan. If sold, any surplus money then goes back into your estate to be shared by the beneficiaries as per the terms of your Will.

Lifetime Mortgages have proven to be far more popular with homeowners than Home Reversion Plans, primarily because, homeowners prefer the security of retaining the ownership of their homes. For this reason we do not offer Home Reversion Plans because, as a responsible adviser, we are fully supportive of our client’s wishes to remain in full control of their property ownership.

Home Reversion Plans are very different from Lifetime Mortgages discussed previously. In this case some or all of your equity is sold to a lender for an agreed sum of money.

You are still legally entitled to remain in the property for the rest of your life without necessarily owning the property fully or in part. The lender will claim their share of the property on the death or entry into long-term care of the surviving Home Reversion plan holder.

It is important to note than in all three of the options, you are still responsible for the maintenance and upkeep of the property, and ensuring that you have adequate buildings insurance in place at all times.

• You will always own your home
• You can receive a tax-free lump sum to spend in any way you want
• You can receive a smaller lump-sum initially and withdraw the agreed balance in smaller increments if required
• You never have to make any monthly repayments but there are flexible plans available which will allow you to do so if you wish.
• You will benefit from the ‘no negative equity’ guarantee with Equity Release Council Approved Plans
• You can remain in your own home for life if you so wish
• You have the option of selling your current property and moving into another (subject to your lender’s criteria for Porting)
• You can protect a percentage of your property for inheritance purposes
• Some lenders will take into account existing health conditions e.g. Diabetes, Heart problems and lifestyle choices e.g. Smoking and accordingly may lend more money or provide a better interest rate or both.
• The full loan is due for repayment on your death or entry into long term care
• Taking out a Lifetime Mortgage can reduce the value of your estate and may have an affect on any means tested benefits you currently receive