Equity Release Lifetime Mortgages Are Now Recognised As an Important Retirement Planning Tool

Equity Release Lifetime Mortgages Are Now Recognised As an Important Retirement Planning Tool


Equity release has been around in several forms since the 1960?s, but is gaining a lot of attention nowadays because of the important roll it can play in retirement planning. Unlike the older schemes, it is now a specialist form of financing where both advisors and providers are highly regulated by the Financial Services Authority.

This type of finance is also attracting attention as a way of meeting the costs of long-term care that might otherwise fall on the state, and for estate planning, to help mitigate possible inheritance tax burden.

Described in various different ways such as lifetime mortgages, home reversion or home income plans, equity release schemes and so on, all schemes essentially provide a mechanism to release the value of the equity tied up in your home.

It provides a way to release some of the value of your home in retirement when needed most, without having to sell it or move out, and can be the right option for many who need additional money to boost either their spending power for luxuries, or simply to cover the every costs of living when current pension provision is inadequate.

Lifetime Mortgages are now readily available for home owners age 55 or over, and are provided with flexible terms, and at prices only slightly higher than those for mainstream mortgage lending. However, unlike conventional mortgages, equity release mortgages do not require you to make regular repayments.

When looking at the different products available in the market look for the SHIP logo or ask your adviser if the plan being recommended carries the SHIP logo to see if your equity release plan is protected. SHIP stands for Safe Home Income Plans and is the trade body that represents the majority of the equity release market in. SHIP members include providers of both lifetime mortgages and home reversion plans. SHIP equity release members guarantee that you can live in your home for the rest of your life, move to another property without penalty, and never owe more money than the total value of your home.

These products are not the right option for everyone. For some people, trading down to a smaller property, or utilising existing savings may be a more suitable route to consider. If using an equity release plan to consolidate debt, you should consider that you are taking a previously unsecured debt and securing it against the home.

Releasing equity in the home is not something to be dismissed out of hand either. It may not be the right thing for some people, but it is for others. It is essential however, that each scheme is examined and the benefits and pitfalls of equity release identified in relation to your own personal circumstances. This includes the effect inflation will have on your remaining property value and the possible effect on your estate.

Releasing equity in the home can be the ideal solution for many, providing extra cash to supplement the state pension, and thereby providing a better quality of life in later years. Some may even consider releasing equity in the home to provide for their children or grandchildren, for school fees or even the deposit to buy their own home.

A Lifetime mortgage is a complex financial product, and consumers considering equity release should always seek independent financial advice as releasing equity from a property can affect eligibility for the means-tested benefits Pension Credit and Council Tax Benefit as well as your tax. Furthermore, it can place restrictions on your ability to move in the future.


Concise Finance Putney