Your equity release mortgage guide

There are a range of fees that can be charged when it comes to equity release. They include:

• Property survey fees (if required) – this fee will depend on the estimated value of your home.
• Legal fees – any solicitor costs involved.
• Broker and advisor fees – depending on the lender, you’ll typically be charged a percentage of the loan amount or a fixed cost.

Yes, there are several other ways to achieve this:

A popular method is through remortgaging to release equity. This can help you get a new and improved mortgage deal, which could allow you to free up equity in your home.

Remortgaging is commonly used for debt consolidation or home improvements, although, there are a range of things you can do with the equity that is released.

Yes, it’s highly recommended. It’s likely those of you looking into Equity Release will have families who care deeply about your situation and have genuine concerns for your future care and wellbeing. It’s a good idea to let them know what you are planning, so they don’t feel you have tried to hide anything from them and they can also plan what they might need to do for you over the coming years.

Sometimes, family members will have worries about the outcomes of an Equity Release scheme. They might be concerned that your estate will be entirely swallowed up by the accumulated interest on the loan, that interest rates are too high, or the advisor might not behave in an ethical way. Most of these worries have no foundation.

Equity Release is a clear financial decision to use a professional, commercial service in a well-regulated industry.

The industry is a lot better regulated than it once was, and an honest broker will never take advantage of a vulnerable individual or couple. The Equity Release Council also lays down standards for the industry to protect your right to remain in your home, your right to move, to ensure interest rates are fixed, and also that your estate will never go into negative equity.

If your family still has concerns, they are welcome to sit in on our meetings, and we promise to answer any questions they may have. We are willing to work around their commitments, or we can answer any queries over the phone. If a broker does not offer this kind of service, it is probably best to steer clear.

Your family should understand that you won’t have entered into this lightly, and that you are taking independent financial advice. You will be informed of the pros and cons of your options, and the risks involved with Equity Release in general.

If you have an open conversation about all the issues, then your family will appreciate your reasons for doing it, as well as being kept informed. Who knows, once they understand your needs, they may even have suggestions for alternative options to help you. With everyone involved, we know we can find a solution that satisfies all the family.

Yes, you can. Many years ago, in the early days of Equity Release products, there were some cases where the ‘rolled-up’ interest on the loan accrued so much that the final amount due to the provider exceeded the actual value of the property. This led to very upsetting situations where lenders were asking family members to cover the shortfall.

We are very happy to say that this no longer happens. Equity Release Council guidelines state that advisors must always recommend ‘no negative equity’ deals, and we have seen that products without this clause have now disappeared from the market. We always look for schemes where nobody loses out. We can find Equity Release schemes that will take care of your needs and ambitions in later life, while still ring-fencing an amount to leave to the ones you love.

Your standard state pension is unaffected by changes to your financial circumstances, although any means-tested benefits you receive could be withdrawn if your new cash reserves go above a certain level. These benefits include pension credit, council tax reduction, savings credit, and income support.

However, there’s a way to keep your savings below the exemption threshold. Instead of taking the entire Equity Release amount in one lump sum, you can arrange a ‘drawdown’ loan. This is where you receive smaller amounts at steady intervals. The added benefit of this is that you only pay interest on the amount taken. You should check with your benefits office or local authority to confirm their policies.

Absolutely, an Equity Release plan should not be a complete drain on your estate. Most schemes currently allow you to ring-fence a certain amount to leave to your loved ones after you die.

Yes, you can. Our advisors will recommend schemes that allow you to move home, as you never know what might happen in a few years’ time. Currently in the market there are plenty of ‘portable’ schemes to choose from.

Be aware that if you do move after taking out Equity Release, your provider will want to do an assessment of the new property. This is to make sure it still meets the lending criteria. Some of the loan may be repayable if the new property is worth less than the current one.

Yes, similar to a mortgage agreement, it’s possible to switch from one Equity Release plan to another.

Be aware that terminating a plan before the end of term may incur an early repayment fee. This will depend on the provider’s policies and the terms of your current loan.