How to release equity in your house
You’ve reached the latter stages of your life and have a property with a mortgage all paid off. You are too old for a remortgage and are well past being a first time buyer. You may want to find out how to release equity in your house and an equity release mortgage is something you’ve heard about. It’s quite a new type of mortgage and requires specialist advice. You want to know how you can use this ‘mortgage free’ property to generate income. This property is sitting as an asset that you can’t currently use. And now you want to fund your grandson’s first step on the property ladder, how could this be solved?
Welcome to an equity release mortgage.
Equity release is fairly new to the market but has taken the mortgage world by storm. It offers a way for elderly property owners to get equity out of their property without having to incur extra payments. You may want to know how to release equity in your house, let’s go into further detail.
Equity release strategy, what is the right plan for me?
Equity release is an option if you want to raise capital and don’t want to move house. If you are of age and are looking to move, a home mover mortgage would be more suitable. This can all be dependent on age, income and your plans for the future. It is the only plan currently that will offer you a lump sum in retirement for equity in your home. If that is your situation currently then it is worth looking at. If you are thinking about getting this product we have a qualified adviser in house with experience in this market. It’s key that you speak with him and go over your situation in full. It might be easiest for you to explain this over the phone, call us on 01324 324171.
If you have decided it’s a good idea for you, let’s get into how to release equity in your house. There are two main ways to release equity in your house. A lifetime mortgage and home reversion. Let’s go into detail on both below.
One way to release equity in your house is with a lifetime mortgage. Generally speaking you don’t have to make repayments whilst you’re alive. The interest rolls up and is paid upon death or selling of the property. This does mean that the debt can increase quickly over time. Some lenders now offer an option to pay this interest early or the interest and capital. This obviously varies from lender to lender. This can be a great way to release equity in your house.
The minimum age for this is 55 usually, the earlier you start with this the longer the costs will run and the more expensive it’ll be generally. Normally the maximum loan to value is about 60%. How much you can release is dependent on a number of factors such as age and value of the property. The interest rate offered will also depend on circumstance which is why it’s crucial to seek advice. This product does have one key feature which makes it a great proposition. This is what you call the ‘no negative equity guarantee‘. This means that when your property is sold and all fees are paid off, if there is not enough money left to pay the outstanding loan neither you or your estate will be liable to pay any more.
There are plenty more features to this loan and getting advice on how to release equity in your house is key. We have access to all the market when it comes to equity release providers, making sure you get a great deal. Talking with us face to face or over the phone is a great way to get to know your situation and what’s the best advice to give. If you want to read up on more quirks of the lifetime mortgage in the meantime I would suggest having a look at the money advice service’s section on equity release they have some great information on this.
If you want to release equity in your house the most important thing to do is get in touch. With an informal discussion we can assess your needs and see how best to advise you to get this process started.
Home reversion works quite differently to a lifetime mortgage. In home reversion, you sell parts or all of your home to a reversion provider who gives you a lump sum or regular payments to sustain you. You retain the right to live in the property until you die rent free but you have to maintain and insure the property as part of the agreement. At the end of the agreement you retain however much you didn’t sell to the provider and you keep the sum of the sale. If you sold all of it of course they would own the proceeds outright. The sale is only processed once you move, are deceased or are in long term care.
In the same way that a lifetime mortgage has the same feature, home reversion also has a ‘no negative equity guarantee‘. This means that when your property is sold and all fees are paid off, if there is not enough money left to pay the outstanding loan neither you or your estate will be liable to pay any more. This can be a great way to release equity in your house.
Most people in the situation go for a lifetime mortgage but this can be situational when going over the pro’s and con’s of either plan. The best way to see which is best for you is to get advice on this. Getting in touch with us can be key to finding out what’s best for you in this process.
Our equity release advice process
As with any financial product, it’s best to get advice from a professional with experience in the industry. With over thirty years experience advising on anything from buy to lets, commercial mortgages all the way through to self builds with plenty of equity release in between, there’s no one better to advise you on how to release equity in your house. We’d start by assessing your current financial situation along with your goals. Once we have a clear picture of what you want to achieve and a pathway to do it and you are happy with our fees for the service, we get to a full fact find. The full financial and personal fact find lets us have all the clear information we need to do the research on equity release products suitable to you.
Once we have the research done we will present our findings to yourself. We base our recommendation of our discussions and your goals. We will present this to you and if you are happy to go ahead, we proceed to an application. Once the equity release application is submitted, the lender will ask for documents to back up the application. We gather them from yourself prior to application and present these to the lender. They will assess and if they’re happy with these and have conducted a satisfactory valuation of the property, they will present a formal mortgage offer.
Get in touch with us today
That is a brief explanation of our process, but of course it all starts with an informal discussion. get in touch today to speak with one of our equity release specialists today to find out how to release equity in your house.