Equity Release
Over your lifetime your main residence can have built up a substantial equity value and should ideally be mortgage free on entering retirement.
"Equity Release" or more accurately Lifetime Mortgages is a means where you free up capital and/or a regular income stream within your property for use now. People under the age of 60 should consider Equity Release as a last resort. Indeed there are few reputable lenders prepared to lend to anyone under this age.
Equity Release is not neccesarily the right solution for everyone but many people do find they have substantial wealth accumulated within their homes and often wonder how they can unlock this without the inconvenience and disruption of selling their property. The old adage "asset rich but income poor" is a situation you may find yourselves in. The main question to consider is how best to use one's accumulated wealth to ensure an adequate quality of life in retirement. One's property is just one asset that may hold the key to this.
This can be an especially emotive issue for families to dicuss as inheritance is important to many people, both the those wanting to pass on their wealth and the beneficiaries of this wealth.
Your property can be a substantial asset that you have worked hard to build and maintain over the years but it can be used to support or meet other life needs such as additional capital or income in retirement.
The availabililty of State benefits should not be overlooked and forms part of our advice process. www.dwp.gov.uk/lifeevent/benefits is a useful link. Equity Release may affect entitlement to State benefits in certain instances.
There are many needs to consider once in retirement and some of these can be simply improving or adapting your home to meet your retirement needs. It may be that you have low pension incomes but are asset rich in terms of property value but need access to additonal capital and or regular income to ensure your qualilty of life is maintained when you retire.
Your main residence can provide substantial access to captial and the most common way to release equity in this for your needs is to sell and "downsize". This option is often overlooked but is a valid strategy to consider. The benefit of this strategy is that your property maintenance costs should reduce, you free up capital to spend or to provide additional income and of course still remain debt free.
However for some staying in the family home is important, you may have close relatives and friends nearby, an excellent local active social life you wish to maintain, the area may be idyllic and be what you've strived for all your working life. You may not be able to find suitable alternative properties with similar qualities nearby, or may not even be able to sell your property due to market conditions. There may be emotive reasons for staying in a family home also linked to many happy memories. You may wish to just access capital to support a grandchild's education, have a need to improve the property or carry out essential repairs and maintenance, you may even have a need to just provide a regular "top up" to pension income to maintain your quality of life.
Care needs may arise, many retirees wish to maintain their independance and to stay in "their home" even if they require care.
Equity Release is a complex financial transaction and can have far reaching consequences for you and your beneficiraies and these should be carefully considered and explained and understood before committing to any decisons. Weath Management is qualified to provide advice in this area.
We can review existing arrangements or provide advice if you are considering this as an option. It is not a decision to enter into without independent financial or legal advice.
Please note we would always advise you to seek Legal Advice in relation to any Equity Release financial decision and are more than happy to meet with your solicitor and would recommend family such as children whose inheritance may be affected to be made aware of any such decision.
Wealth Management only considers reputable lenders who subscribe to the "SHIP" Safe Home Income Plan code of ethics. More information on SHIP is available at the link below:
http://www.ship-ltd.org/aboutship.aspx
If you would like to know more, or want to discuss Lifetime Mortgages please contact us at andy@wmifa.co.uk