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Posts Tagged ‘Tax Free Lump Sum’

Equity Release – Important Questions Answered

Thursday, December 16th, 2010

Before entering into for equity release, you need to be well versed with this financial product. Below are answers to some common questions that might make your task easier such as what is equity release.



What is equity release?

Equity release schemes help retired individuals to raise money from their property. Firstly, the term ‘equity’ describes the net value of your property. This is calculated by taking the current sale value of the property & deducting any mortgage or secured loans upon it.

The money raised is this equity tied up in the property. This money can either be withdrawn as a lump sum or in monthly instalments, the popular of which is primarily the former. A main feature of these equity release schemes is that you do not have to move out of your house and allows you to live your life in peace and financial comfort.


What are the uses of equity release plans?

The tax free lump sum released is yours to spend as you wish. The equity release companies do not place any restrictions on how the money is spent. You can make use of the released cash to supplement your retirement income and clear debts including mortgages, loans, credit cards, hire purchase & catalogues.

Apart from this, you could also use the money to go on holidays, redesign your home, purchase new car or increasingly an popular reason which is to help children invest in bricks & mortar or get on the property ladder for the first time.


What are the types of schemes available?

Equity release schemes broadly fall into two categories – lifetime mortgages and home reversion plans.

With lifetime mortgages, you get a secured loan on the property. You do not have to make any monthly interest payments. Instead, the interest gets rolled up and is paid off when the property is sold. This would be on death of the last survivor or moving into long term care. Therefore, you can continue to live in your home for the rest of your life or until the time you move into a retirement or care home. The main difference between the roll-up lifetime mortgage scheme & the home reversion is that with the former, the property remains 100% in the name of the property owner.


With home reversion plans, you can sell a part or all of your property to the lender in return for a lump sum. The home reversion providers will therefore take partial ownership of your property to the extent of the percentage sold.

A lifetime tenancy is created so you can live rent free in the property for the remainder of your life. This are great equity release solutions for those who wish to guarantee an inheritance for their children & beneficiaries.


Why is life expectancy important?

The type of scheme chosen by you will depend on how long you are likely to stay in your house. The older you are, the more tax free cash you can raise.

With a lifetime mortgage scheme, the longer you live the greater the final balance will be. This is due to the roll-up & compounding effect of the interest on a year on year basis. Therefore, there you cannot predict how much equity will be left at the end of the day as you do not know long the plan will roll-up for.

On the 0ther hand the advantage of home reversion schemes are that you can guarantee an inheritance for your beneficiaries. The reason for this is due to the fact that if a percentage of the property is sold, then the remaining percentage is yours to keep. Consequently, the estate will retain this percentage of the final sale value of the property & can guarantee an inheritance to pass down.


Not sure which scheme is best for your circumstances? Why not call the Equity Release Supermarket team on freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

We look forward to hearing from you.



Mark Gregory CeMap CeRER


Equity Release Schemes – How Do They Benefit Retired Homeowners?

Friday, November 19th, 2010

Lower pension incomes and high living costs have resulted in retired people looking for different financial solutions to make ends meet.

Due to these issues, more and more retired homeowners are turning to equity release schemes for an additional source of income. Equity release allow homeowners to use some of the cash tied up in their homes and get a tax free lump sum. They are also permitted to continue living there rent free & in the case of lifetime mortgages with 100% ownership to.


Additionally there are other advantages gained from equity release schemes:

No need to move – One of the best things about equity release schemes is that homeowners do not have to worry about moving out of their homes when they sign up. In the case of roll-up lifetime mortgages the plan holder retains 100% ownership of the property & can remain there until the second person has died or moved into long term care. With regards to the second type of equity release – home reversion plans, the planholder retains the portion of the property they do not sell to the reversion company.

Inheritance protected equity release products – Another benefit of these schemes is that homeowners can now choose whether or not they want to guarantee a certain percentage of their home. This means that they can still be sure there is some equity left for their beneficiaries. This can therefore form part of a gift of their inheritance.

Supplementary income – More than 50% of retired homeowners have wealth that is tied up in their property. For this reason, many choose home equity release schemes to gain additional income. This retired people to meet daily expenses & assist with the day to day costs of living in today’s retired environment.


In all cases, homeowners can move home during the term of their equity release schemes. However, they have to notify the equity release company. The reason for notification to the lender is that the equity release planholder has two choices. Firstly, they have the option of porting the equity release scheme over to their new property. The new property would have to meet the lenders property criteria, however it can be transferred with no early repayment penalty. Secondly, the scheme can be repaid in full, thus removing any future equity release liability. You would therefore need to bear in mind any potential early repayment charges.


As equity release schemes can be rather complex, it is best to have a professional explain and oversee the process. All Equity Release Supermarket advisers are authorised by the FSA & the equity release schemes they advise on are all SHIP members.


The Equity Release team will provide independent financial advice & research from the whole of the equity release market.

To gain from their experience, please call freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk


Equity Release Schemes – Retire With No Worries

Thursday, September 23rd, 2010

With an increasing number of retired people unable to meet their expenses on pension, equity release schemes are becoming one of the best tools to solve this area of need. It allows individuals to unlock the equity that they have built in their home, thereby assisting them meet the shortfalls in their financial affairs.

Equity release schemes allow homeowners to release the equity from their property to generate a tax-free lump sum or regular income. The money generated from equity release can be utilised to pay for home improvements, debt consolidation or to help meet the requirements afforded to a comfortable and luxurious lifestyle after retirement.


Retired persons over 55 years of age and having their own property are the ideal candidates for equity release schemes. With different types of equity release schemes available, you should choose the one that suits your requirements.


Types of equity release schemes

Two different types of equity release schemes are currently available – home reversion schemes and lifetime mortgages. As both schemes offer their own unique advantages, you must choose the best one.


Home reversion – This scheme allows you to live in your property till you die or move into long term care whether that is a retirement home or with relatives. However, you need to sell a part or your complete property to the reversion company. In return, the home reversion company will either offer you regular income or lump sum cash, depending on your requirements. The most popular form of release is the tax free lump sum option.

Lifetime mortgages – With lifetime mortgage equity release schemes, you will always have complete ownership of your property. By opting for a lifetime mortgage scheme, the need for making monthly repayments is completely eliminated. You can even continue to live in your property until you pass away.


If you are looking for a solution to retire without any worry, equity release schemes can be the perfect solution.


To chat to a specialist equity release adviser, contact the equity release team on 0800 678 5159.


Three FAQs Appertaining To Equity Release Schemes

Tuesday, September 21st, 2010

You maybe aware of the term equity release? Equity release is becoming more commonplace with people over the age of 55. However, some individuals are still unaware about the features of these particular schemes.


The following are frequently asked questions appertaining to equity release:


1. What is equity release?
It is a mortgage scheme that is designed for the benefit of retired or older citizens. Equity is best described as the value of the home devoid of any outstanding mortgage. With the equity release scheme, you can release some amount of equity which is tied up in your property, in the form of a tax free lump sum.


2. Why should I opt for equity release?
Equity release schemes will provide you with accessible cash. You might receive this as a lump sum amount or in a monthly installment format. People have the freedom of spending their money in any way they want or choose. For instance, you are free to spend the money on holidays or paying off debts. In addition, you have the choice of staying in your home for the rest of your life.


3. Will I require professional advice?
If you have decided to opt for this particular scheme then it is advisable that you get professional advice prior to making major decisions. Contact a professional and skilled advisor who has been in this field for a few years. Such advisors will guide you through the different equity options and make recommendations accordingly. The equity release advisor will also explain the entire process in simple understandable terms.


Consider advice from Equity Release Supermarket to discuss your options on the many different equity release schemes in order to secure your future.


Common Questions Asked About Equity Release

Friday, August 13th, 2010

There is no doubt historically, that buying property long term has been a profitable investment.

This phenomenon is now becoming of great assistance to people nearing retirement and needing an additional source of income to help live comfortably. Older homeowners now have the option to free up money from their home to gain a steady income. This can be done though equity release schemes which enable homeowners to release accumulated equity in their property.


Why would people want equity release?

The main reason to opt for this process is to free up money in a property. This money can be used to accomplish a number of purposes. While some homeowners prefer to use the money on daily expenses to make their lives better, others use it for taking holidays or to buy personal items they want or need. Regardless of the need, equity release calculators can help analyse & work out how you can achieve this quickly and easily.


Is it an ideal option?

Equity release can be an ideal way for retired people to get a certain percentage of income from their properties. However, the convenience of this option differs from person to person. While some people prefer to get regular payments from their homes without moving out, there are others who would want use their property to get a large tax free lump sum.


Do I need legal advice?

This is one of the most common questions people ask themselves when asking about equity release. Although it sounds like a fairly simple process, it is best to have a professional overseeing the process. This will ensure the scheme is suitable and beneficial for you. One of the aspects the solictor must undertake to comfirm he/she is satisfied the client understands the contract they are entering into, is the signing of the SHIP certificate.
This confirms the solicitor has discussed the equity release scheme with the client, & is happy, that they are happy, with the process & legal implications of taking out equity release form the property.
Equity Release Supermarket can recommend a solicitor who is a member of ERSA. This is an alliance formed between a group of established law firms that specialise within the field of equity release. These solicitors aim to promote the importance of specialist equity release legal advice within the equity release marketplace.


To find a solicitor who can act on your behalf contact the Equity Release Supermarket team on 0800 678 5159.


Equity Release Schemes – Live Your Life The Way You Want

Thursday, July 29th, 2010

Gone are the days when you needed to sell your property to unlock the equity in it.

Equity release schemes now give you an opportunity to stay in your home while you can still financially benefit from it. You can utilise the value of your home as a means to receive cash. This can be in one lump sum payment, lump sum & drawdown payments or in the form of regular monthly installments.


This new income source can be used in many different ways and is becoming quite popular among people of retirement age. The increasing costs of everyday living expenses puts financial pressure on particularly the retired population.

A lack of finance in retirement can to prevent us from living comfortably on a daily basis. This is when equity release schemes can fulfil their potential in offering homeowners the perfect option to enhance their lifestyles & enjoy life.

You may want to carry out home improvements, lighten some of your financial burden or just spend some more time fulfilling leisure pursuits such as holiday breaks or even worldwide cruises. Equity release schemes enable you to live out all your dreams. The money you get from the equity release scheme can be spent in the way you want. Obviously, this is where independent equity release advice is important.


People often want to release the maximum possible from an equity release scheme & invest the proceeds. However this invariably is not the best option.

With the lowest equity release interest rates around 6.5%, by taking a large release from the property in the current econmic climate, it would be impossible (unless excessive risk was taken) that one could obtain the same 6.5% return.

Therefore, it is not good advice to take a large tax free lump sum from an equity release scheme just for investment purposes.


A more cost effective way of achieving this goal of increasing your income could be by a drawdown equity release scheme. This scheme would enable an overall cash facility to be provided by the lender. From this facility, an initial tax free lump sum can be withdrawn, leaving the unused facility with the equity release lender that can be drawdown over future years.

The advantage of this method is that interest is only charged on the money withdrawn; not on the remaining funds in reserve. Interest is only charged on this as & when additional funds are taken.

This reserve facility is therefore the solution to providing the income required. The funds can be withdrawn as ad hoc payments in minimum amounts of between £2000-£5000 depending on the equity release lender.

Therefore, depending on the annual income required, this amount can be withdrawn from the equity release drawdown facility meeting the income objective.



Considerations while opting for equity release scheme

While planning to opt for an equity release loan, there are few important things you need to consider. The lender, via the legal process will first check that all your mortgage & secured loan balances are completely repaid. They will also check whether you are the owner of the property by checking the land registry records.

Moreover, a valuation of your property will also be conducted by an independent local surveyor. Your age is also a determining factor on how much equity you can obtain.


If you want to live a stress free life after retirement, choosing an equity release scheme can be  an excellent solution.


Contact Mark on 0800 678 5159 to discuss your income options further or visit Equity Release Supermarket


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