Lifetime mortgages, or Equity Release as it is better known, remains for the public who are close to, or in retirement, one of the least understood areas of property finance.
Yet for the over 55’s who are asset rich and cash poor, it is still a very effective way of helping realize ideas, plan inheritance properly – or in some circumstances, making ends meet as sadly trying to pay for your shopping with a nice picture of your mortgage-free property hasn’t caught on yet with retailers.
As a qualified Equity release consultant, I have tried below to deal with the top 5 misconceptions about equity release.
You risk losing your home
According to research by Safe Home Income Plans (SHIP), seven out of ten consumers believe that opting for equity release means you have to move out of your home. However, as long as that property remains your main residence, you can remain in it for the duration of your life.
You won't be able to leave an inheritance
Sixty seven per cent of people think that by releasing equity from their homes they will not be able to leave anything to their friends and family. Equity release does reduce your estate, as once you die or move into long-term care your house is sold and the cash is used to pay off the loan. The remainder of the money can be left to your beneficiaries.
Your children will be saddled with the debt
Four in ten people worry that their children will inherit the loan, but because you never borrow anymore than the value of your house, once it is sold the debt is cleared. No debt will ever be left to the estate.
You won't be allowed to move house
Half of the people questioned by SHIP thought that equity release tied you to your property. In fact, you can move your equity release loan to another suitable property without financial penalty.
Equity release is unsafe and unregulated
Just less than half of people worry about regulation within the equity release industry. However, as long as you choose a SHIP member company then you are protected by the Financial Services Authority.
If you want to find out more about this either for yourself, or a friend / relative over the age of 55, then please get in touch – mark@themortgagemonkey.co.uk
