Plans:
There are two broad types of plan available to you.
These are Lifetime Mortgages and Home Reversion plans.
Lifetime Mortgages
You could receive a tax free lump sum, or an income (or both), by way of a loan which is secured on your home. There are no restrictions on how you might spend the monies thus released.
With a lifetime mortgage there are no repayments required until you die or go into long term care. At which point, the loan and accrued interest is repaid. If there is any equity remaining in the property after this, it can be passed to your heirs / beneficiaries.
You will retain ownership of your home, and a guarantee that you can live there for the rest of your life.
"Drawdown" facilities are also available, which allow you to release funds over time, as and when you need them. This can give excellent flexibility and also means that less interest accumulates than if you take the maximum amount in one go.
If house prices rise, this may actually benefit your beneficiaries as they would be left with any remaining capital. But remember too that if house prices fall there may be nothing left for you to pass on - so it is vital to take independent advice if leaving something behind is important to you.
Raising funds via a lifetime mortgage could also affect your entitlement to receipt of State benefits. You also need to consider the effect of rolling-up of interest, which is not possible to control. At Golden Age Retirement Planning, we will be pleased to guide you through your options before making a recommendation.
All of the equity release providers we use are members of SHIP, (Safe Home Income Plans Ltd), who set out a code of conduct which we abide by. The sale of Lifetime Mortgages is also regulated by the Financial Services Authority.
Do I qualify?
You must be at least 55 years old to qualify. If there are two of you, the youngest one of you must meet this age.
Your home must be worth at least £40,000.
Acceptable construction types vary from provider to provider. You should call us for more information.
How much can I release?
The table below explains the maximum amount you can release.
| Age | 55 | 56 | 57 | 58 | 59 | 60 | 61 | 62 | 63 | 64 | 65 | 66 | 67 | 68 | 69 | 70 | 71 | 72 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Percentage | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 33 | 34 | 35 | 36 | 37 | 38 | 39 |
| Age | 73 | 74 | 75 | 76 | 77 | 78 | 79 | 80 | 81 | 82 | 83 | 84 | 85 | 86 | 87 | 88 | 89 | 90 |
| Percentage | 40 | 41 | 42 | 43 | 44 | 45 | 46 | 47 | 48 | 49 | 50 | 51 | 52 | 53 | 54 | 55 | 56 | 57 |
Source: The Exchange July 07
Home Reversion Plans
With a home reversion plan you sell all or part of the property to a home reversion provider, in exchange for a cash sum, or an income. You are guaranteed to be able to live in your home for the rest of your life, with the provider selling the property when you die or go into residential care.
An advantage of these types of scheme is that if you only sell part of your home, the remainder can be left to your beneficiaries. For example if you sold 60% to the reversion company, the remaining 40% would be left to your heirs. You will also have the certainty of knowing the future repayment position as there is no rolling-up of interest, and who owns what, and how much, is set at the start of the contract.
Taking out a home reversion plan does mean that the plan holder loses ownership of part, or all of the property, and would lose out on any future growth in the part of the property which was sold. In addition because the cash or income raised will not represent the true value of the part of the property which has been sold, it is vital that you receive the best advice for your needs and circumstances. Your Golden Age Retirement Planning adviser will explain everything to you clearly and objectively.
Do I qualify?
You must be aged at least 65 to take a home reversion plan.
Your home must be worth at least £60,000.
How much can I release?
As you retain the right to live in your home for life, you will receive only part of the proportion of your home that you sell.
Here are examples of the maximum release amount, assuming you are in good health and that you sell 100% of your home.
| Age | 65 | 70 | 75 | 80 | 85 | 90 |
|---|---|---|---|---|---|---|
| Percentage | 43.5 | 51 | 58 | 62.5 | 67.5 | 73 |