Equity release is a great option for homeowners over 55 who are looking to supplement their income. Equity release plans let you access the value of your home, whether as a lump sum payment or regular cash payments. For advice from an Equity Release Solicitor, visit www.tivoli.legal
Many people have misconceptions about equity release, which can be confusing.
My children will inherit nothing and end up in debt
The value of your estate can be affected by taking out an equity release plan.
Equity release is the borrowing of money against your home’s value (a life mortgage), or selling a portion or all of it to a provider.
- Lifetime Mortgage: This type of equity release allows you to keep your home, and any money left over after the loan, interest, and sale can be passed on to your family.
- Home Reversion Plan: You can choose to sell a portion of the market value of your house, say 40%, to raise funds. The provider will receive 40% of the sale price when the plan is over. Your family can inherit 60% of the value of your home, less any possible sale costs and inheritance taxes.
The biggest concern for those considering equity release is the fact that the final cost will be higher than the value of their home and they’ll have to pay off the debt.
It would be necessary to sell the house and find additional cash, either from an estate or another source, to cover these costs.
If you want to avoid a negative equity situation, ensure that the provider of your choice is a member and authorised by the Financial Conduct Authority. Plans from approved providers are backed up with a “no-negative-equity guarantee”.
Although taking out an equity release may reduce the amount of inheritance that your children can inherit, you and your children will never be in debt.