Many people are seeing that the income they have in retirement, their pension annuity plus other sources of income, is insufficient for their retirement lifestyle, and they are considering wider options.
What does the term ‘equity release’ mean ?
The equity, or value, you have in your home is the value you could get for it on the open market less the amount of mortgage or loans outstanding secured against it. The term equity release relates to a way of getting cash from the value of your home without the need to have to move from your home. Lifetime mortgages and home reversions are the two main types of equity release schemes.
To qualify for an equity release scheme:
You have to own your own home.
You have to be typically over 50 years of age.
You can get a cash lump sum or a regular income.
You can use either however you so wish.
You continue to live in your home.
You continue with the maintenance of your home.
If you wish to take an income you have options:
You could invest the lump sum in an annuity or some other income producing investment.
You might effect a scheme where you receive a regular income not linked to an annuity or to an investment.
You might effect a scheme whereby you take the income only when you want it.
You might effect a scheme that provides a cash lump sum at the outset with an income starting later.
There is typically a minimum amount to be borrowed of between £15000 to £25000.
Any liability to inheritance tax could be less on your death if you effect an equity release scheme.
With any scheme you carry on being responsible for property maintenance.
Should long term care be required the equity release scheme will usually carry on unchanged if care is provided in your own home or if just one of you moves to a residential or nursing home. If you both move into a care home the scheme will usually come to an end and the property will be sold.
These are complicated issues. Equity release is not straightforward and not suitable for everybody, and specialist advice is required.
