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0191 695 9493

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Face-to-face solicitor conversation with elderly couple

Equity release is a complex financial decision that requires a comprehensive understanding of an individual’s circumstances and future aspirations. Today we explore the value of engaging in personal, face-to-face meetings with industry professionals during the equity release process. 

Protecting potentially vulnerable individuals

Equity release is beneficial for many people, however as this product is only available to people aged 55 and over, a lot of potential candidates for equity release are elderly and they may lack family support. Some may be particularly vulnerable and/or have limited financial literacy.

Equity Release professionals, such as solicitors, play a crucial role in safeguarding the interests of these individuals. Meeting in person allows equity release solicitors to ensure that individuals are fully capable of making informed decisions and can identify signs of vulnerability or undue influence.

De-mystifying equity release products

As there are legal and financial aspects to be considered when choosing an equity release product, after the help of a qualified advisor to make an application for the right product, the guidance of a face-to-face solicitor is imperative to further ensure comprehension of the mortgage contract and the implications and potential risks associated before legally proceeding.

At North East Equity Release we use trusted, specialist equity release solicitors to ensure complex legal jargon is explained to our clients in a face-to-face meeting and in a way that they understand, helping them to navigate the fine print and minimising potential misunderstandings.

Using Equity Release Council members

As members of the Equity Release Council, we are committed to recommending qualified equity release solicitors who are also part of this industry-renowned trade body. We want to ensure that our clients are receiving the best, independent legal advice and are fully aware of the legal obligations and financial implications associated with an equity release plan.

Customer protection is a priority at North East Equity Release and we ensure every client receives impartial and independent legal advice and are aware of all of their options before proceeding. Get in touch with Joanne today to learn more.

Did you know that a fifth of equity release plans that are taken out are to cover the day-to-day cost of living? Using property wealth can help to supplement your income during the current cost of living crisis. If you’re retired and concerned about maintaining your current lifestyle or wish to support your children and grandchildren through this difficult time, then a lifetime mortgage could help you. But are there any drawbacks to doing this?

Senior man contemplating equity release in his home
Lifetime Mortgages are for life

Releasing equity by means of a lifetime mortgage is not a financial decision that should be taken lightly. Whilst current cost of living pressures can be a significant source of worry, it is important to consider the long-term implications of a lifetime mortgage. Hence the name, lifetime mortgages are a long-term product where a loan is secured against your home until you die or move into long-term care.

Lifetime mortgages charge compound interest

Lifetime mortgages charge compound interest, meaning that if you choose not to make monthly repayments, the amount you owe will roll up. This reduces the amount of equity left in your home and can eventually add up to the total value of your home. This can have an impact on the amount of inheritance that you can leave behind for your loved ones.

Interest rates are rising

With the Bank of England raising the base rate, interest rates are continuing to rise. Lifetime Mortgage interest rates currently start over 6.50%, which is considerably higher than the rates this time last year. There are a number of factors that can contribute to lifetime mortgage interest rates, including the requested LTV, your credit history and your age.

equity release interest rates

Conclusion

It is important to consider all your options and speak to a qualified equity release adviser. From taking out a retirement interest-only mortgage to remortgaging and exploring local authority grants, there are many options to consider before taking the plunge with a lifetime mortgage.

We have your best interests at heart. Get in touch with our friendly adviser, Joanne and arrange a consultation to discuss your requirements.

For older homeowners in need of a financial boost, Equity Release could provide the perfect solution to cash flow problems.

Also referred to as Retirement Mortgages, Later Life Mortgages and Lifetime Mortgages, these loans enable borrowers to tap into the cash that is tied up in their home. This can make it possible for homeowners to meet other financial obligations and necessities or enable greater financial freedom during retirement. Like any loan product, Equity Release can feel daunting. However, these types of loans are simply another type of mortgage.

To dispel some of the concerns and confusion around Equity Release loans, we’re here today to talk about the ins and outs of this type of mortgage to create a clearer picture of how equity release could help you.

Coins on a table in front of a model house

What exactly is Equity Release?

Equity release loans are just another mortgage product when it comes down to it, which is a loan secured against your property while allowing you to continue to retain 100% ownership of your home and provide you with access to a tax-free cash lump sum from your own wealth tied up in your home which you pay interest to a lender for the use of instead of realising the wealth by selling the property.

There are 4 key differences between a standard mortgage and an equity release lifetime mortgage:

1) How the level of borrowing is assessed.
A standard mortgage is assessed by your income and affordability, as you are contractually obliged to pay the capital and interest back each month. An equity release mortgage is based on your age (life expectancy) and the value of the property. In essence, the loan and any interest is usually repaid from the sale of the property at some point in the future.

2) The freedom to choose to make no monthly payments
With an equity release mortgage, you can choose to make no monthly payments and allow all of the monthly interest to roll up over time. Alternatively, you can service part or all of the monthly interest and/or even make capital repayments in order to preserve your equity and even reduce the outstanding loan

3) Transparent repayments

This is a profound difference between modern day equity release mortgages and historical mortgages that still carry understandable bad memories. In addition, unlike historical plans, these mortgages now offer fixed, transparent, and limited early repayment charges if the client wishes to repay the mortgage at any time.

4) The term of the mortgage
A standard mortgage has an end date (also known as the term) by which the loan must be repaid. An equity release mortgage has no term with the loan usually being repaid upon death, entering long-term care or sale of the property.

Ultimately, equity release loans open the possibility for homeowners to unlock their wealth tied up in their home by releasing a cash lump sum from their home’s value or ‘equity’. The equity of your home is simply the property’s value, minus any outstanding mortgage or other forms of lending that are secured on it.

What benefits can equity release bring?

Letter blocks which spell equity

The key attraction of Equity Release is that borrowers can raise capital whilst retaining one hundred percent home ownership.

For many, the main plus point of this is that it provides money that they can use to enjoy their retirement. After a lifetime of working and saving in order to raise kids, run vehicles and meet mortgage repayments, many retirees are looking to finally release some of their financial burdens during their long-awaited retirement. Dream holidays, new hobbies and home improvements are just a handful of the things that are made possible through this scheme.

Such loans may also greatly relieve the pressures caused by the current cost of living crisis in the United Kingdom, enabling older homeowners to cope with inflation whilst maintaining a comfortable standard of living.

Who is eligible?

Homeowners aged 55 and over and who own their own property are eligible candidates for an Equity Release Mortgage.

To take out this type of mortgage, however, you must be looking to release at least £10,000 in equity from your property.

The value of your home will, of course, also have an impact on the level of loan available to you.

What about interest, how does that work?

The interest rate is fixed for the lifetime of the loan and is based on the amount you borrow in relation to the value of your home.

As there are no contractual monthly repayments,(although you can choose to service the interest and make capital repayments if your wish) the interest accrued is rolled up for repayment when the home is sold.

A mortgage adviser who specialises in equity release products will be best positioned to advise you on the ins and outs of your interest.

Can I still leave an inheritance?

Of course, the main concern for many when it comes to equity release is inheritance. Like the majority of people, you probably wish to leave something behind for loved ones after your departure. If you’ve worked hard to pay off the mortgage on your property, it’s likely that you have always imagined that it would be the value of this property that was passed on as an inheritance to those you leave behind.

Of course, it is essential to recognise that your equity release loan will essentially decrease the amount that you can leave an inheritance to your loved ones. Thankfully, however, many Lifetime Mortgage products enable borrowers to protect a percentage of the value of their home through an Inheritance Protection Guarantee.

If you’re considering an Equity Release loan, it’s essential you seek advice and guidance that you can trust. That’s where North East Equity Release comes in. Simply contact us today to find out how we can help.

At North East Equity Release, we know there is some confusion around modern equity release products, so we’re here to dispel the myths!

This year, it was revealed that 67% of homeowners over the age of 55 were not clear on what equity release was, with 18% claiming that they had been put off equity release due to stories they had heard about mis-sold, unfit for purpose products.

We are here to set the record straight! We’ll shine a light on common equity release myths about costs, inheritance, interest rates, and more, so you can take this flexible, versatile product into account when comparing financial solutions for you and your family.

Myth #1 I’ll lose my home!

YOU WON’T LOSE YOUR HOME! Many homeowners view equity release as essentially selling their home – but this couldn’t be further from the truth.

Releasing equity simply means that you are unlocking cash from the value of your home and using it however you see fit while maintaining 100% ownership. You still have the right to live there until the end of your life, or until you decide to move into long-term care. Just in case you missed it, we’ll repeat it. YOU WON’T LOSE YOUR HOME!

Myth #2 Equity release is expensive

Again, not true! Equity release can be surprisingly cost-effective. According to a report from April 2021, the average interest rate on equity release products was down to 4.07%. Furthermore, if you choose to create a cash reserve account to access funds in the future (as opposed to taking out an initial lump sum), you can avoid a build-up of interest and will not be charged until the reserve money is released.

The idea of monthly repayments can be daunting. We’re happy to inform you that when you release money from your home, you will be free from those monthly repayments. Whilst interest will accumulate over time, this does not need to be paid until your property is sold. You can also choose to make voluntary repayments if you wish and you can repay the loan in full at any time, although an early repayment charge may apply.

Myth #3 I won’t have anything to leave for my loved ones

The money released from your home can be used in whatever way you see fit. Many people opt to use the funds to provide loved ones with an early or “living inheritance,” giving them the chance to help a child or grandchild with a deposit on their first home or paying off student loans.

With some plans, you can protect a portion of equity as inheritance, or you can opt for a serviced interest peace of mind plan to avoid the interest build-up. At North East Equity Release, we can advise you on these features that many leading providers offer.

senior woman sitting on sofa with her grandchildren

Myth #4 I’ll end up owing more than what my home is worth

As long as you ensure that your lifetime mortgage has a no-negative-equity guarantee, and opt for an Equity Release Council approved lender that meets product standards, you won’t have to worry about owing more than your home is worth.

If the value of your home decreases and no longer covers the amount you have borrowed, the remainder of the loan will be written off.

Speak to Joanne Manghan, our highly experienced Equity Release Adviser, for tailored, free advice on Lifetime Mortgages.