What is Equity Release?

Essentially equity release can help you unlock the wealth tied up in your home, helping you make the most of your retirement or giving you a tax-free lump sum to use how you wish. We can advise you on available options, offering guidance and information to ensure the right choice is made.

There are two main types of equity release – Lifetime mortgages and home reversion plans. At Lawford Mortgages we concentrate on lifetime mortgages, the most popular type of equity release. As is common within the industry, when we speak about equity release we generally mean lifetime mortgages.

Home reversion plans is selling your property to a company and having the legal right to remain in the property, you no longer own the property. It is now a very small part of the equity release market with very limited home reversion plan providers.

What to consider before you take out an equity release plan.

The Advantages

Right to remain in your home – Under ERC rules this feature enables you to live in your home rent free for the rest of your life. This will be either until the last person has died or moved into permanent residential care. * No monthly payments are required – Most lifetime mortgages & all home reversion plans have little impact on your budget, as the lenders require no monthly payments towards the interest charged. * A no-negative equity guarantee – Provides the assurance that no matter what, with roll-up equity release schemes, you can never end up owing more than the value of the property. * Provides tax-free cash or income – Equity release helps support you financially throughout retirement, enabling you to spend the proceeds on anything to make life that ‘little more enjoyable’. * The flexibility of modern equity release plans means that you can release the money as a lump sum, or a lump sum with a drawdown facility.

This is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration.

There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £1995 or 1.5% of the loan

The Disadvantages
The value of your estate will reduce and the amount you can pass on in inheritance via your estate will, therefore, also decrease. * Your entitlement to certain state benefits may be affected.

If you want to repay or end the plan early there may be financial penalties in doing so. * Lifetime mortgages are paid back with compounded interest meaning that over the longer term the amount you owe can grow quite quickly. * You should always consider the alternatives. Equity release is just one possible option for acquiring tax-free money from your home; downsizing or taking on a lodger are two other options. * Difficulty remortgaging – Upon completing a lifetime mortgage, you have secured a loan on your property. This may restrict your options to raise additional finance moving forward.