Designed Especially For You
We provide a highly focused service for you when you come to us for advice. We need to know exactly what you want for your future. That’s why we listen very, very carefully, when you tell us why you think equity release is the best route to achieve it. Then we go to work to get you the best result:
- You tell us all about your available income, assets and investments apart from the value of your house.
- Then you tell us where you are spending your money at the moment.
- How much you will need to achieve your desired future is what we’ll work out for you.
- Then we find out the maximum release you can get from your house at the best market rate.
We help you tailor your future to the money available.
- We put together a Cash Flow Model, which will project how long your money will last you - see the Cash Flow video for a fuller explanation.
Peter Maxwell-Lyte was the very first Independent Financial Advisor to join as a member of the Equity Release Council and has agreed to abide by the guiding principles of this organisation.
Types of Equity Release
- Lifetime Mortgages and Home Reversion Plans are the two main types of Equity Release. To understand the features and risks, contact us for a personalised illustration.
- An Equity Release plan will reduce the value of your estate and as a result there may be no value left to pass on. Equity Release will not be suitable for everyone and may affect your entitlement to state benefits.
- Equity Release is a complex area, MaxLyte can give advice on these schemes.
Releasing equity from your home may deliver the additional income you need to help you across your retirement years. With the luxury of time, it’s likely you’ll be able to spend more of it around your home and garden, and with the family too. It’ll also enable you to devote more energy to existing interests and hobbies, as well as possibly picking up one or two new ones. And don’t forget the holidays you always meant to go on but couldn’t due to work commitments. Historically, your retirement years would have been largely funded by your pensions (both personal and state), other applicable state benefits, along with any investments or savings you may have. However, the impact of the population living longer, poor returns on annuities and savings rates in recent years, and the general economic climate, as well as the increased pressure on state funding, has meant many now have to look elsewhere to help bridge the gap.
Equity Release Calculation
We provide personalised equity release calculations based upon your own circumstances, rather than a generalised estimate. For a detailed Equity Release Calculation, please click on the button and you will be taken to our Equity Release tool where we can give you your calculation.
(Please note that it is not mandatory to fill out all fields in the form).
At the same time, we’ve seen a massive growth in the value of the homes we live in. For example, 30 years ago the average house price was around £28,000, which equated to under 3.5 times average earnings. Today, the average house price is over £189,000 and almost six times the earnings figure! It is no wonder then, that an increasing number of homeowners feel that they are ‘cash poor but equity rich’ and look to release some of the value in their home. Many would simply decide to downsize, and raise the necessary funds this way. However, an alternative exists – Equity Release – which will enable you to remain in your home if you meet certain criteria, and are aged over 55.
In the latest annual review of the attitudes of over-50s to retirement, it gives an insight into why a sizeable number may want to stay put. The over-50s have spent an average of £30,000 creating their perfect home and almost two out of five (38%) said that they want to stay there for the rest of their lives. This figure rises to nearly one in two, when solely asking the retirees. In fact, more than half of the working homeowners aged over-50 now plan to use the equity in their home to help fund their retirement years – compared to just 28% in the same survey in 2012.
There are two main types of equity release plans – you can either borrow money, which is secured against your home (Lifetime Mortgages) or sell part, or all of your home (Home Reversion schemes). The former accounts for the vast majority of all plans taken out. The average amount raised is almost £62,000 – and with a lifetime mortgage the majority are not taking all the money at once, but drawing it down when it is needed (within an agreed timeframe) – to help avoid paying interest on money that’s not required at that particular stage. The maximum you can borrow depends on the age of the youngest planholder and the value of your property. Broadly, this ranges from 20% of the value of your property if you are 60, up to around 50% if you are 90 or over. The reason for this is that providers, who are members of the Equity Release Council (equating to most of the marketplace), allow the final planholder to remain in the home until they die, or go into long-term care, irrespective of when the loan was taken out, or what is owed. It’s vital that you take professional advice.
Equity Release can sometimes be viewed as a product of last resort, but many also turn to it for POSITIVE reasons
It’s Your Wealth!
Let’s cover the issue of inheritance first. This has tended to be the Holy Grail, with the home being viewed as something the family would inherit. The equity in your home may represent a sizeable amount of your overall capital – but there may also be savings and investments which, it’s largely accepted, should be used to help fund the retirement years. But why exclude the home from the same thought process? Although, in this respect, it may make sense to consult with your family in order to manage their expectations. With the home, it’s possible that there’s also an emotional attachment, even though it’s likely that it would then need to be sold swiftly to help share out the value of the estate after meeting any applicable inheritance tax demands. However, attitudes do seem to be changing from both the homeowner and the potential family members that will inherit. There’s a desire to see funds used to benefit people whilst the ‘giver’ is still around. The most obvious route is supporting the grandchildren with education costs or deposits to help them get their foot onto the property ladder.
Home and Garden Improvements
For sizeable initiatives, this would be viewed as another positive reason for using equity release. Any added value to the home may also benefit those inheriting down the line, quite apart from the homeowner having a better environment to live in.
Assistance With Regular Bills, and Paying Off Loans and Credit Cards
Worryingly, almost two million retired adults have less disposable income than the average weekly pocket money of an 11-year-old child (£8), once essential living costs are accounted for! So it’s no wonder that helping to supplement their retirement income is still probably the biggest reason for opting for equity release. Even in this instance, it needn’t be just for negative reasons, as many will use the extra funds to simply help enjoy a better lifestyle across the retirement years.
Clear The Outstanding Mortgage
This is a growing reason for considering equity release. For example, the average balance at maturity for an interest-only mortgage was £60,000 in 2012, but is expected to rise to around £110,000 by 2020 – with about 150,000 loans maturing each year across the current decade. In some cases, the borrower may not have the investments in place to fully repay the loan.
Funding Care Costs
Not exactly a positive reason for raising funds, but could be an essential one – which may enable the homeowner to remain in their own home and receive daily visits. The alternative could be to possibly sell up and use those funds to cover care home costs – which could amount to circa £28,000 a year vs. around £13 an hour for home visits.
Some homeowners may decide to raise funds for the trip of a lifetime, or the car they’ve always wanted.
Downsizing Your Home
This offers an easy way to raise the funds you need at this stage – and the option to take up equity release at a later date would still be there.
Existing or Potential State Benefits and Local Authority Grants
If you’re already claiming benefits, and these are means-tested, then raising funds elsewhere may affect your ability to continue to claim (or reduce the regular payments). Additionally, there may be some benefits that you should be claiming for, but are not aware of.
Trace Any Lost Pensions, Investments or Savings
Across your lifetime there’s a good chance that you may have forgotten about a long-held investment, or a small pension from a past employer.
Look At Your Existing Investments and Savings Portfolio
Maxlyte can offer professional advice to decide if raising funds this way is a better option.
Consider Taking In A Lodger
If you don’t have an issue with someone else living in your home, then this too could be an option.
As a member of the Equity Release Council, we have a commitment to observe a stringent Code of Conduct. These safeguards have recently been further reinforced with additional rules and guidance. There is comfort for the potential borrower, such as:
- You won’t lose your home. Irrespective of whatever is owed on the loan (even if it exceeds the value of the property), the planholder(s) will be allowed to remain in the property for life, or until they move into long-term care, provided the property remains their main residence. Additionally, this means that there is a ‘no negative equity’ guarantee – resulting in no subsequent debt for the planholder’s family.
- The right to move to another suitable property without any financial penalty. Although they may have to repay part of the Lifetime Mortgage loan, if moving to a cheaper property, the opportunity to move remains. An additional factor to consider is if both you and your partner are planholders. Take the issue of care, for example, where your equity release scheme will usually carry on unchanged if care is provided in your own home, or if just one of you moves into a care home. If you both move permanently into a care home, the scheme will usually end. And on the death of the first planholder, the arrangements will continue, if the other planholder remains in the home. So, as you’ll see, much has been done to ensure that if you do opt for equity release, there are plenty of safeguards in place, in addition to both Lifetime Mortgages and Home Reversion plans being fully regulated by the Financial Conduct Authority.