Seize the moment with equity release

Video transcript

The majority of people in their 50s and 60s reckon that older age will allow them to do things they`ve not been able to do earlier on in life and equity release may be one way help to fund those dreams.

As part of its Love Later Life campaign, Age UK has surveyed a range of people about their attitudes to getting older and 57 per cent of those aged 55 or older feel positive about that time in their life and fully plan on seizing the moment.

Of course, buying that dream sports car, landscaping your garden or taking that round-the world cruise will cost money, and if you have not got the funds to hand this is where equity release can come in, it can enable you to borrow against the value of your house and put it towards whatever it is you`ve always fantasised about doing.

You don`t have to spend the money on yourself though you could always use the money to bring happiness to your family by helping a relative pay for the mortgage on their first home or helping to cover university fees.

The Age UK figures show that nine-out-of-ten (91 per cent) respondents reckon that something needs to be done to help us all lead a better later life and equity release could be worth considering.

The money doesn`t have to be taken in a single chunk, it can be paid out in smaller instalments to help supplement your pension income, hopefully giving you a more relaxed retirement as and when you need it.

First Choice Finance will try to help you to get the most suitable equity release scheme from their panel of lifetime mortgage scheme providers.

Discover more about our services by visiting firstchoicefinance.co.uk or call us on 0333 003 1505 from a mobile or 0800 298 3000 on your landline.

Types of equity releases

Equity releases can be separated into three categories. The first couple types are mortgage or loans and home income plans where you use your home to raise funds and retain ownership. The third type of equity releases is called a home reversion scheme where you sell all or a percentage of your property for funds and preserve the right to carry on living there until the property is no longer needed. It is very important to seek expert advice before using a home equity release scheme, choosing the wrong type of equity release scheme can have a negative effect on your quality of life.

Types of equity releases in brief
Home Income Plans: used to obtain a monthly revenue stream. The loan will normally be invested into an annuity based investment that funds your income and the interest on the loan. Some schemes have a fixed interest rate that can guaranteed income. Monies paid into annuities are lost when you die unless you have capital protection. Taking Capital Protection can reduce the value of the loan if you die within a set timeframe from the beginning of the scheme or refund part of the annuity. Home Income Plans are quite often only available to persons over the age of 75.

Mortgage and Loans: by using the equity locked in your property, you borrow a percentage of your homes value from the equity release provider. The loans interest rate will be agreed upon which you pay back over time. The loan has to be paid in full either by you or your next of kin if you die or sell your home. The money from the loan can be used for anything, a new car, a nice holiday, a gift to the family etc. In some cases you may be offered a roll-up loan which is where you don`t have to repay the interest. The interest is added onto the loan owing. In some circumstances this is good practice but for others it can result in the payments increasing dramatically.

Home Reversion Schemes: used to sell all or some of your property for a regular income, cash lump sum or even both. The funds received can be invested into an annuity-based investment that can provide an additional income. You can remain living in your home for the rest of your life.

Home Reversion Schemes: is where you sell all or part of your home in return for a lump sum, a regular income or both. The money you receive can be invested in annuity-based investment which can provide you with additional income. In return you will be able to live in the house for the rest of your life. There are a number of drawbacks to this scheme. The first is that the amount of money paid for your property under the scheme is unlikely to be anywhere near its market value. In fact full reversions often offer between a third to a half of its true value. Over and above this, because you no longer own the property, should you move into long-term care, the house can be sold legitimately.

Homeowner Secured Loans 9.8% APRC. Representative example: Borrow £50,000 over 180 months. 60 months at 8.1%, £497.83 pcm fixed at 60% LTV. Then 120 months at 10.1%, £539.89 pcm variable. Total payable £94,656.60. Total cost of credit £44,656.60 (including: £795 lender fee, £985 broker fee & £42,876.60 interest). First Choice are tied to certain loan providers.

Mortgages & Remortgages 8.4% APRC. Representative Example: Borrow £120,000 over 25 years at 5.99%, £778.86 pcm fixed for 3 years at 60% LTV. Then at 8.75%, £974.86 pcm, variable for 22 years. Total payable £286,416. Total cost of credit £166,416 (including: £985 broker fee, £999 lender fee & £164,432 interest)

Unsecured Personal Loans REPRESENTATIVE 49.9% APR (VARIABLE) First Choice are tied to certain unsecured lenders.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Security is required on immovable property.

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

Established In 1988. Company Registration Number 2316399. Authorised & Regulated By The Financial Conduct Authority (FCA). Firm Reference Number 302981. Mortgages & Homeowner Secured Loans Are Secured On Your Home. We Advice Upon & Arrange Mortgages & Loans. We Are Not A Lender.

First Choice Finance is a trading style of First Choice Funding Limited of 54, Wybersley Road, High Lane, Stockport, SK6 8HB. Copyright protected.