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EQUITY RELEASE – Competitive mortgages & protection insurance

Equity release is the name of a range of products that let you access the positive equity (money) that you have tied up your home, if you are over the age of 55. Releasing equity from your home when you are younger than 55 is simply releasing equity and we can provide you with either of these options.

You can take the money you release as a lump sum or, with some equity release schemes, several smaller amounts.

Equity Release

There are two main equity release options:

  • Lifetime mortgage: you take out a mortgage secured on your property. Unlike an ordinary mortgage, you don’t normally make any repayments while you’re alive. Interest is added to the loan and the loan amount and interest are paid back when you die or when you move house.
  • *Home reversion: you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, but you have to agree to maintain and insure it.

Lifetime mortgages

Most people who take out equity release use a lifetime mortgage because you don’t have to make any repayments while you’re alive, interest ‘adds on’ (unpaid interest is added to the loan). This means that the debt can increase pretty quickly. Some lifetime mortgages let you pay interest, or some of the interest, as you go.

In the same way that ordinary mortgages vary from lender to lender, so do lifetime mortgages. When considering a lifetime mortgage, you should check:

  • The minimum age at which you can take out a lifetime mortgage. Many lifetime mortgage providers insist that you are at least 60 or 65 before you can apply. We’re all living longer so the earlier you start the more it is likely to cost in the long run.
  • Whether you can withdraw the equity you’re releasing in small amounts as and when you need it or whether you have to take it as one lump sum. The advantage of being able to take money out in smaller amounts is that you only pay the interest on the amount you’ve withdrawn. If you can take smaller lump sums, make sure you check if there’s a minimum amount.
  • What level of maintenance you’ll be expected to carry out and how often your property will be inspected (this could be every few years).
  • The maximum percentage you can borrow. You can normally borrow up to 60% of the value of your property. The percentage typically increases according to your age when you take out the lifetime mortgage.
  • Different lifetime mortgage providers may have slightly different thresholds.
  • Whether you can pay some or all of the interest. If you can do this, the mortgage will be less costly. However, with a lifetime mortgage where you can make payments, the loan amount may be based on your income as well as the value of your home. Providers will also have to check that you can afford these regular payments

Releasing Equity

Generally if you have more than 75% loan to value in your home and wish to raise money from the equity you can gain equity with either a 2nd mortgage or by releasing equity with your current lender.

Equity can be used for any purpose, you get to keep your home (as long as you keep up with the repayments) and you continue to be homeowner.

For more information on our products and services please complete our enquiry form below or email info@sj-fs.co.uk or call 01423 561060

*we use  referral service for Home Reversion Plans as Stuart James Financial Solutions and HLP are not authorised to sell Home Reversion Plans.