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What is Equity Release?


Equity release is a financial arrangement available in the United Kingdom that allows

homeowners, typically those who are aged 55* or older, to access the equity tied up

in their property. It provides a means for individuals to release a portion of the value

of their home in the form of a tax-free lump sum or regular payments, while still

retaining the right to live in the property.


The main types of Equity Release products in the UK are Lifetime Mortgages and

Home Reversion Plans. A lifetime mortgage involves taking out a loan secured

against the property, with interest accruing over time.


The loan, along with the accumulated interest, is typically repaid when the

homeowner passes away or moves into long-term care. Home Reversion Plans, on

the other hand, involve selling a portion or all of the property to a provider in

exchange for a lump sum or regular income. The homeowner can continue living in

the property as a tenant without paying rent until they pass away or move into care.


Equity Release is often considered by individuals who have substantial equity in their

homes but have limited income or savings to support their retirement or meet

specific financial needs. The released funds can be used for various purposes, such

as supplementing retirement income, funding home improvements, paying off debts,

or assisting family members with their financial requirements.


It is important to note that equity release is a significant financial decision with long-

term implications.


Therefore, seeking independent financial advice is strongly recommended to

understand the potential risks, costs, and impact on inheritance. Equity release

schemes are regulated by the Financial Conduct Authority (FCA) to safeguard the

interests of homeowners, ensuring transparency, consumer protection, and fair

treatment throughout the process.


*As at early 2024 – there is at least one scheme whereby you only need to be aged

50+ - you would need to receive professional advice to learn more.


Equity release offers several potential benefits for

eligible homeowners.

Some of the most common benefits include:


Access to Tax-Free Funds:


Equity release allows homeowners to access a portion of the equity tied up in their property

as a tax-free lump sum or regular income.


This can provide individuals with a valuable source of funds to supplement their retirement

income, meet immediate financial needs, or improve their quality of life.


Continued Homeownership:

One significant advantage of equity release is that homeowners can continue to live in their

property for the rest of their lives.


This ensures they can enjoy the comfort and familiarity of their home while accessing the

equity it holds.


No Monthly Repayments:

With lifetime mortgages, the most popular form of equity release, there are typically no

monthly repayments required.


Instead, the loan and accumulated interest are repaid when the homeowner passes away or

moves into long-term care.


This can provide financial relief for individuals who may have limited income or prefer not to

make regular repayments.


Financial Flexibility:

Equity release allows individuals to use the released funds as they see fit.


Whether it’s paying off existing debts, covering healthcare expenses, funding home

improvements, helping family members, or enjoying a more comfortable retirement,

homeowners can use the funds according to their specific needs and goals.


A sample of popular reasons why people utilise Equity Release

Pay off an interest only mortgage!

Help your child or grandchild get a foot on the housing ladder!

Pay off other loans or credit card bills!

Pay for a new conservatory or kitchen!

Take that once in a lifetime holiday!

Just increase your quality of life!

It is important to note that equity release is a significant financial decision with long-term

implications.

Therefore, seeking independent financial advice is strongly recommended to understand the

potential risks, costs, and impact on inheritance. Equity release schemes are regulated by

the Financial Conduct Authority (FCA) to safeguard the interests of homeowners, ensuring

transparency, consumer protection, and fair treatment throughout the process.

‘A Lifetime Mortgage’ is a loan secured against your home.

Equity Release will reduce the value of your estate and may affect your entitlement to

means-tested benefits.’


For further information & or advice please contact Glenn Lewis CeLTM

at Alexander Financial Management alexanderfm.com Mob: 0779 900 4172 or

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