Equity release is often recommended as a lifetime mortgage for individuals aged 55 and above, enabling them to access tax-free funds from their primary residence.
Through equity release, you retain full ownership of your property and have the flexibility to decide whether to make monthly repayments similar to a traditional mortgage or not.
In this article, we will explore the advantages and disadvantages of equity release plans, providing you with a comprehensive understanding of this financial option.
Pros of Equity Release in London
- Flexibility in accessing funds: Equity release in London offers the flexibility to receive funds as a lump sum or in smaller amounts based on your needs. Opting for withdrawals as needed can help reduce the overall interest payable. Our expert assessment of your situation will guide us in recommending the most suitable approach to minimise interest and meet your objectives.
- Retaining ownership: Whether you choose a regular mortgage, retirement interest-only mortgage, or a lifetime mortgage in London (equity release), you will maintain 100% ownership of your property. The outstanding loan is repaid upon your passing or if you enter long-term care. You have the right to reside in your property or downsize if necessary until those circumstances occur.
- No negative equity guarantee: All lifetime mortgage plans come with a no negative equity guarantee. This means that when your property is eventually sold, following your death or entry into long-term care, your estate will never be liable for more than the property’s value at the time of sale.
- Options for interest payments: Lifetime mortgages provide various options for managing interest payments. You can choose to make monthly interest payments, no monthly payments, or a combination to minimise the accumulation of interest. Our equity release advisor in London will discuss and guide you on the most suitable approach.
- Inheritance planning: We collaborate with your financial advisor to incorporate equity release in London into your inheritance tax planning, ensuring a comprehensive strategy that aligns with your financial goals.
Cons of Equity Release in London
- Beware of limited or biased advice: It is important to be cautious as we often encounter situations where clients have received inadequate or restricted advice solely focused on equity release plans. Always ensure that your equity release advisor in London offers comprehensive guidance on the full range of later life lending solutions and operates independently. We take pride in being among the few companies in the UK that can provide advice on the complete range while maintaining independence.
- Consider alternatives first: Prior to considering equity release in London, it is essential to explore other options in the realm of later life lending. This includes regular mortgages, retirement interest-only mortgages (RIO), and hybrid products. Your advisor should thoroughly assess and discuss these alternatives before making an equity release recommendation.
- Impact on means-tested benefits: Releasing equity may have an adverse effect on means-tested benefits you currently receive. It is crucial to consider the potential impact on the amount of benefits you are eligible for.
- Impact on inheritance: Opting for equity release in London means your children or beneficiaries will inherit a reduced amount. However, releasing equity in smaller increments can be a strategy to maximise the inheritance you leave behind.
- Early repayment charges: Equity release is a long-term lending solution, and most products entail early repayment charges, typically within the initial ten years. It is important to be aware of these charges and factor them into your decision-making process.
What should be considered first, before equity release in London?
At Londonmoneyman, we take pride in being among the select few mortgage advisors in London who can offer a comprehensive analysis of the entire range of later life mortgage products.
In considering your options, we prioritise the following in order: regular mortgages, which can extend up to age 85 in some cases, a diverse selection of specialised retirement interest-only mortgage products (RIOs), and lifetime mortgages, which include equity release plans.
Our dedicated team specialising in later life mortgages will assess your individual circumstances and recommend the most suitable product or combination of products for you.
It is important to note that equity release is not the sole solution, and there may be other options better suited to your needs and situation.
Please bear in mind that equity release plans only allow you to release equity from your primary residence, not from a second home or buy to let in London. In such cases, regular mortgage options may be more appropriate.
How Clients Use Equity Release Funds
Our clients opt for equity release in London for various reasons, with the most common ones being home improvements, managing finances after a late-life divorce, paying off an existing mortgage, providing financial assistance to family members, and supplementing pension income.
Equity release plans offer flexibility, allowing you to receive the funds either as a lump sum or in smaller installments as needed. Our dedicated team of equity release advisors in London will carefully assess your situation and provide tailored recommendations to guide you in choosing the most suitable approach.
The Equity Release Process
To get started, simply book your free consultation with our experienced later life team. You have the option to book this either by phone or online at your convenience.
During this session, we will address all of your inquiries, provide insights into the available products, discuss associated fees, and determine the maximum amount you can release.
If you decide to proceed with us, your advisor will arrange a subsequent meeting to delve deeper into the details and ensure everything is thoroughly prepared for your application.
Throughout the process, our goal is to minimise stress and make it as seamless as possible for you. We will assist you every step of the way, from coordinating with solicitors to navigating any valuation or legal requirements that may arise.
Involving Your Family
We understand that making the decision to pursue equity release is significant, and we believe it’s important to involve family members right from the beginning. Their support and involvement can be invaluable during the application process, as they often have important questions and insights.
By including your family members in the discussions, you can gain reassurance that you have chosen the right company and ensure everyone understands the advantages and considerations of the plan.
We welcome and encourage your family members to participate in the process, as they may have their own inquiries and concerns. Our video software allows for seamless inclusion of multiple family members during calls and discussions, making it convenient and easy for everyone to be involved.
Book a Free, No-Obligation Consultation!
If you’re ready to move forward, we are here to help you every step of the way. You can reach out to us by phone or book an appointment online to schedule a free, no-obligation consultation focused on exploring your later life mortgage options.
During this consultation, we will address all your inquiries and provide personalised recommendations tailored to your specific circumstances. You don’t need to prepare anything in advance for the call – simply provide us with your ages and address.
To accommodate your busy schedule, we offer evening calls as well, ensuring that we can find a convenient time that works around your work or children’s commitments.
To understand the features and risks, ask for a personalised illustration. Equity Release in London may come in the form of a lifetime mortgage or home reversion plan.
A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.
A home reversion plan involves selling all or part of your home to a plan provider in exchange for a tax-free lump sum.
Date Last Edited: June 23, 2023
