Equity Release Schemes

A family home is something that can`t just be replaced. You may have spent a lifetime building memories, sharing experiences and spending quality time with the rest of your friends & family there. Alternatively it could be that you just don`t want to move at this time. No matter what the reason, wanting to stay in your family home whilst releasing some of the equity in it is a praiseworthy choice that you are entitled to make.

First Choice Finance have already helped a multitude of clients obtain the money they desire by arranging their equity release funds to be released to them for any purpose. These equity release plans can tap into the equity wealth that you have built up in your home, enabling you to take an upfront larger lump sum of money or regular smaller sums from your property as you wish - whilst staying in your home and not having to make any repayments through your lifetime.

Our UK equity release team have specialist tools and equity calculators to hand - enabling you to get a good idea of how much money you can release from your home in just a few minutes. These products allow for both good or bad credit and usually do not even require a credit search. Call for your free confidential quote matched to your scenario on 0800 298 3000 (freephone) 0333 003 1505 (mobile friendly). Alternatively fill in our shorton line enquiry form.

The Basics Of Equity Release

Equity release schemes have a few key points that define them. We like to call these the basics of equity release. Essentially the equity that you have in your home is the current property value minus any mortgage, second mortgage or secured loan that you have against it. Put simply, an equity release scheme is a way of getting money from your home without having to move out of it or make repayments at this time.

Now onto the basics:

• You have to be over a certain age, normally fifty five. If you are under 55 you may well qualify for a remortgage or secured loan instead
• The house must be sales worthy and you need to be the home owner or mortgage payer.
• You can get a cash lump sum, a regular income or a combination of both to use as you see fit.
• You continue to live in your own home until you move into permanent care, sell the home or die.
• You are still responsible for maintaining your home

Lifetime Mortgages

If you want to remain in your home and are worried that when retirement comes you might not be able to live off of your pension income or perhaps you are already retired and want to access your equity either to spend on your family or yourself - it is worth considering equity release schemes. Likewise you may be finding that your income now is just meeting all the bills but not enabling you to enjoy your retirement. Fortunately we have our own UK based equity release and finance advisers that can help you weigh up your options without any obligation.

Here at First Choice we specialise specifically in lifetime mortgages, we give advice and recommend a lifetime mortgage scheme to provide our customers with the best possible tailored solutions and plans from our equity release panel.

With a lifetime mortgage you take out a loan that is secured on your home and continue to live in your own home and you are still the registered owner of the property at land registry. The lender gets the security for their mortgage to you by taking a charge on your property to enable them to recover what they are owed from the sale of the property as and when that happens. You will have to pay back the original mortgage plus the interest that is due to the lender if you took the no repayments mortgage option (as this is added to the mortgage balance each month) but not until you pass away, choose to move house or move into a care home. For a more in depth look at this particular equity release scheme head over to our page all about taking on a >>lifetime mortgage <<.

Home Reversion Plans

When it comes to types of equity release schemes, another way to raise money from your property is home reversion, there are some important differences. Whereas with a lifetime mortgage you retain 100% ownership of your home, with a home reversion scheme you sell part or all of your property to a reversion company. You no longer own part or all of your property but you can still continue to live there acting as a tenant to the reversion company for the share you have sold to them. You will then live there until you die or move into a care home and at that point the property will be sold. In this type of equity release there is no interest element as the lender is relying on their share of the property being worth more when the house is sold and when the scheme is set up you will get less than the actual percentage value at that time. This sounds complicated so to give an example of how the numbers work, this is not an actual plan ot is just to explain how home reversion is structured;

If your house was currently worth £100,000. The reversion company offers you £30,000 for a 60% share of the home. If you accept they have a share of the house worth £60,000 and have only paid £30,000 for it. However to be fair they will not be getting any interest in addition on top and they will have to wait and see how much the property is worth when it is sold to see how their investment has performed overall. This type of equity release is a small component of the market as of last year, however that does not mean it is to be ignored. For more information on home reversion schemes please contact your independent financial adviser.

Equity Release Scheme Examples

Lifetime Mortgage Example
A couple are in there early 70s and currently own a house worth £300,000 with no mortgage on it. They choose to take out a life time `roll-up` mortgage for £100,000 with a fixed interest rate. The couple now have the £100,000 that they have released to spend as they wish. They do not have to pay interest on the amount because it is rolled up into the debt. They stay in the property until they choose to move house, into a care home or die and at that point the loan plus the interest is paid off with the sale proceeds. Anything over and above the loan that is raised from the sale will fall into the couple`s estate.

Home Reversion Example
A couple are in there early 70s and currently own a house worth £300,000 with no mortgage on it. They speak with a home reversion company who offers to pay them £80,000 for a 50% interest in their house. They now have the money to spend as they wish and can remain there until they die. At which point the company will take 50% of the sale proceeds, the balance then going into the estate. There will be a lease set up at the time of taking out this type of equity release which whilst it may be a relatively low payment any commitment will need to be adhered to. First Choice does not currently advise on home reversion schemes.

When might you take out an equity release scheme

If you fancy treating yourself in your retirement, want to make up a pension shortfall or have an unexpected expense to pay for, an equity release scheme could help you stay in control of your finances.

The Equity Release Council is the trade body for the sector and its data shows that from January to June in 2010 to 2013, the average value of the equity removed from property has progressed from a little over £45,000 to more than £55,000.

Although we offer equity release schemes with advances as low as £10,000, so you can just borrow what you require for your project.

Unlike with home loans or traditional repayment mortgages, where you have to make repayments over a set number of years until the capital and interest is all paid back, you don`t need to pay back anything with an equity release scheme, instead the money is repaid either when you die or go into long-term care.

Some lenders allow you to pay some or all of the interest on going, thereby reducing the rate at which the balance grows, this is known as a lifetime interest only mortgage.

There are two main forms of equity release, home reversion and the lifetime mortgage.

With home reversion, you sell a percentage of your home to the provider, which they will reclaim when the house is sold after you pass on or in line with the other stated events in your contract.

With lifetime mortgages, the amount you borrowed plus the interest built up, unless you have been paying it along the way, is taken from the final sale price. Remember this is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

There are often two options with this form of equity release either you can often opt for an up front lump sum payment, or a regular drawdown option.

First choice specialise in lifetime mortgages, alongside traditional mortgages, remortgages and homeowner loans, to get a free illustration on our products fill in the online form, calling 0333 003 1505 from a mobile or 0800 298 3000 from a landline.
 

Equity Release Lifetime Mortgages This is a lifetime mortgage. To understand the features & risks ask for a personalised illustration. Our fee is £985 which is only payable upon completion. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME, OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE.

Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk

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