12 Facts that will Answer All Your Equity Release Questions

Forget all you think you know about equity release. This article will talk you through one of the FCA regulated equity release plans called the Flexible Lifetime Mortgage.

What is a lifetime mortgage?

Designed for people aged 55 and over, the lifetime mortgage is partly responsible for equity release sales rocketing by 125% from 2010 to 2015*. It is ideal if you own your property, are asset-rich and want to access to this wealth in a flexible, safe way without having to sell your property and move.

The facts about the Flexible Lifetime Mortgage

1. With this Flexible Lifetime Mortgage, you can take as little as £10,000 tax-free and leave more funds in reserve for when you need it. Your property remains your own; you have just borrowed against it.

2. If you want to pay some of the money back into your property, you can do so with optional repayments of up to 10% per year of the amount you borrowed.

3. If you don’t want to pay any back, you don’t have to. Like any other borrowing, an interest rate is charged and any interest you choose not to pay is simply added to the total and paid when you or your heirs eventually sell the property.

4. Things to watch out for are state benefits. If you are in receipt of these, having money in the bank may affect them so you should check this out before proceeding. Also, by taking money out of your property, there will be less left later when you want to leave some money in your will. Try to find a balance between what you want now and what you want to leave.

5. The interest rate is fixed for life so you can be sure of what you are being charged. Those who remember mortgage rates in the mid-teens know the value of a fixed rate.

6. No matter how much you take with this plan, you will never owe more than the value of your property.

7. You can never pass on any debt to your children with this plan.

8. If you want to move and don’t want to repay the money, you can transfer the plan to another suitable property, subject to criteria.

9. If you wanted to repay the full amount, you can do, though there may be an additional charge for doing so. Alternatively, you can repay up to 10% each year with no additional charge.

10. You own your home, like with any other mortgage.

11. A solicitor of your choosing will talk you through the terms and conditions in detail before you commit to anything or incur any costs.

12. Anyone who recommends you take this plan will have to be regulated by the government body called the Financial Conduct Authority, and passed specialist qualifications and exams.

Whether you're curious as to how much you can release, or you want to take the initial steps towards releasing equity, our handy calculator will give you the information you require.

You can also contact us on 0800 029 1233 to discuss your needs with a view to arranging a no obligation face-to-face home visit with one of our financial advisers.

The Flexible Lifetime Mortgage is by leading insurer Aviva and is only available through qualified financial advisers such as those working with the Reader’s Digest Equity Release Service.

*(Equity Release Council Lending Figures Q3 2010 – Q3 2015)

Reader's Digest Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fsa.gov.uk/register/home.do) under reference 610205. In using this website I give express consent to Responsible Life Limited to contact me on the details provided from time to time. Calls may be recorded for training and quality purposes. This is a Lifetime mortgage which may reduce the value of your estate and may affect your entitlement to state benefits. To understand the features and risks ask for a personalised illustration. Any information contained herein is a personal opinion of the author and should not be considered to be advice of any kind. Inheritance Tax planning is not regulated by the FCA. Think carefully before securing other debts against your home. By consolidating your debts into a mortgage you may be required to pay more over the entire term than you would with your existing debt. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,295. Our adviser will talk through the setting up costs of a lifetime mortgage before you make any decision to proceed.