Connecting with Equity Release Companies
Needing access to more cash in retirement?
What is Equity Release?
Equity release companies offer many ways of helping you gain instant access to your property’s equity. Choosing the right equity release provider for you is vital as each equity release case is very different.
We’ll come back to this later…
In a nutshell, Equity Release is the use of a number of policies or financial arrangements that enable you to unlock the value of your property and ‘release’ the equity (cash). This will give you access to the lump sum. The equity in a property comes from the total value of your property minus the mortgage amount already paid.
A property’s equity is often a person’s greatest source of collateral. It allows you to tap into accrued capital in your property without dealing with the hassle of moving home.
Equity release is a way of extracting cash from your property by taking out a property loan on your home. It is only available to you if you are 55 years and over. A rule with equity release providers is that you can take the money in one lump sum.
Several smaller amounts with interest paid or as a combination of both.
You do not need to have fully paid off your mortgage in order to qualify for equity release.
How much Equity can you Release?
The biggest question you probably have by now is the amount; how much exactly can you release?
In order to know how much equity, you can release from your home, there are two main things that equity release providers look at:
- Property Value – A surveyor will need to give your property a professional valuation
- Life Expectancy – Based on your age and health. For a joint application it will take into account both parties. Often the older you are, the more you are able to borrow.
The usual amount you can release is between 20% and 50% of the value of your home. The specific amount that an equity release provider will offer you will take into account the property value and your life expectancy. According to Key Retirement, the largest equity release provider in the UK offers an average equity release loan of around 35%.
5 Reasons For using Equity Release providers
Access to a lump sum
In retirement, gaining access to funds through standard loans or re-mortgage can be difficult on a pension income as these avenues require monthly payments that may be difficult to cover. Equity release companies offer access to a lump sum without monthly commitments, it is tailored to fit you with a personalized plan which gives you flexibility in your spending.
Paying off Existing Mortgage or Debt
A lot of our customers see Equity Release as a way to clear debts and get rid of financial stress in retirement. Going into retirement with outstanding debts and unpaid mortgages can be a strain especially with monthly income reducing. This is one of the top reasons for seeking equity release providers.
Inheritance and Helping Family
Rather than having their capital tied up in their homes, our customers are choosing Equity Release companies to help them gift their children and grandchildren. This is often also done to support their children to get onto the property ladder themselves or to pay off the dreaded student debts.
Home improvements is often a long-term objective, re-investing in their property for a better quality of life and to boosts its value if they decide to put it back on the market. This is very popular with our customers as they often desire to either build an extension for their children or to make the home more accessible to them as they age.
Living the Life You Want
Retirement is often portrayed as a time to enjoy the luxuries of life; financial struggles can cloud this image greatly and make it seem very out of reach. Many of our customers retire with their riches tied up in their assets, Equity release provides access to the funds required to live the life desired and earned in retirement. This means money to spend on holidays, cruises, cars, whatever your heart’s desire.
Equity Release Options
Lifetime mortgage – Available to Ages 55+
This allows you to borrow some of your home’s value at a fixed or capped interest rate, provided that the property in question is your main residence. You have the option of paying back the interest to reduce the overall cost or allowing the interest to roll-up.
The loan amount and any accrued interest is not paid back until death or relocation into long term care. The home is then sold and money that is made from the sale is used to pay off the loan. Your family also has the option to pay off the mortgage and keep the property if they have the capacity to do so.
Take Into Account
One thing to take into account when looking into Lifetime Mortgage is a no-negative-equity guarantee, this ensures that the interest from borrowing does not exceed the value of your property. It is important to take this into account as if the interest does go beyond the property value, it would be the burden of your beneficiaries to repay the extra money that sale of the home does not cover.
The typical rate for lifetime mortgage equity release is 5.1%. It is important to consider all these factors to make sure that you are making the right decision for you.
Home reversion – Available to Ages 60+
This is where you sell a portion of or all your home to a home reversion provider in return for a lump sum or regular payments. You’ll also get a ‘lifetime lease’, this allows you to remain in your home rent free until you die or move into care.
Usually you can sell from 25% to 100% of your property to the equity release provider. When the property is sold, the proceeds are split based on yours and the reversion providers percentage. You can ring-fence a percentage of your property for later use, for inheritance purposes for example.
Like Lifetime Mortgage providers, home reversion lenders also take into consideration your age; they demand a bigger share of equity from younger borrowers than they do from those that are older. They also consider the value of the property and your health and lifestyle.
Costs to consider for both Lifetime Mortgages and Home Reversion Plans:
- Legal and Valuation Fees
- Arrangement Fee
- Adviser fee
- Completion Fee – Can be paid on completion or added to your mortgage
- Maintenance of the property
The difference between the two is that lifetime mortgage gives you the exact rate while generally home reversion plans are better if the property prices stay flatter and worse if there is a substantial rise.
Where Do We find you Equity release COMPANIES?
So, you have decided that Equity Release is for you?
The next and arguably most important stage is finding the best equity release provider for you, this is where we come in. At First Marketing Agency, we act as the middle man, bridging the gap between you and your equity release needs. There are numerous equity release companies out there and it can become overwhelming trying to find one that is right for your exact requirements.
Our priority is to make sure that we point you in the right direction, taking into account your wants and needs. We make sure the equity release provider we recommend is able and willing to make the process as smooth as possible. And most importantly, tailored specifically for you.
Our Equity Release Providers
We have developed a large client base of equity release companies in our network. Each equity release company in our network pays a fee to gain access, meaning you are only ever put in contact with people who are keen to deal with your case.
This puts us aside from numerous other equity release companies as we are able to really filter, and cherry pick the best of the best for you. Hence why we are so valued and have been able to create an incomparable network of equity release providers.
If you are looking to release equity on your property, look no further than First Marketing Agency. Taking into account your specific criteria, we can filter our network to find the best equity release provider for you.
If you are ready to take action, get in touch with us.
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