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Lifetime Mortgage & General Equity Release Advice in Bournemouth
Reviewed by Tom Philips
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A lifetime mortgage is the most common form of equity release Bournemouth throughout the rest of the UK. When you opt for a lifetime mortgage, you will gain access to a lump sum of money as a result of borrowing money from your home.
When you do so, you will be charged interest on your loan. This interest will accumulate over time and turn into compound interest. The great thing about lifetime mortgages is that you do not have to repay the loan until after you pass away or move into a care home.
The equity release lifetime mortgage is only repaid once you pass away and your loved ones sell your house. It is the proceeds from the sale of the property that will be used to pay off the equity release loan [1].
Whilst you do not have to repay any of the loan whilst you live, some people choose to repay the interest they receive on their loan in an attempt to pay off the compound interest that is building up.
This way, there might be some money and inheritance left to your loved ones after you sell your property and the equity release loan is paid off.
You do not have to worry about your loved ones being responsible for having to pay off any of the equity release loan you take out. This is because all loans via equity release in Bournemouth are protected with a no negative equity guarantee.
This means that even if your house decreases in value and no longer covers the loan amount, the bank will always be the ones liable to pay off any of the remaining loan.
Some people do attempt to repay the actual loan early, but this might mean that you have to pay a percentage of the total loan amount as a penalty for doing so. This is why lots of people choose to only repay the interest on their loan instead of the actual initial loan itself [1].
When you opt for a lifetime mortgage and equity release Bournemouth, you get to spend the money you receive on whatever you want.
This could be home improvements, a holiday, a new car, or a gift to a loved one to help them pay off a mortgage or outstanding University fees.
You get to remain the sole owner of your property when you take out a lifetime mortgage, and no one will ever ask you to leave.
You can also opt to receive your money in one large lump sum or through a number of smaller payments, which is known as a drawdown plan [2].
When you opt for a lifetime mortgage and equity release loan, you will have to choose from an enhanced lifetime mortgage, an interest-only plan or a voluntary repayment plan.
In order to qualify for a lifetime mortgage and equity release in Bournemouth, you have to be aged 55 or over, own your own home in the UK and this property needs to be worth at least £70,000 when valued at the time of taking out an equity release plan.
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Home reversion plans are a lot less common than lifetime mortgages. You have to be 65 years old to qualify for a home reversion plan, which means that a lot less people qualify for a home reversion plan than they do a lifetime mortgage.
The main difference with home reversion plans is that you sell a percentage of your property to the lender in exchange for your money.
This could be as much as 90% of your home, or as little as 10%. In order to qualify for a home reversion plan, your lender must be confident that the value of your home will increase over time [1].
Once you sell a percentage of your home to the lender, they will be able to release a tax free amount to you which you are free to spend on whatever you want to.
It is important to remember that even when opting for a home reversion plan, you remain the sole owner and will never be asked to leave. You will remain living in your home until you pass away or move into a care home.
If you want more information on equity release in Bournemouth, and think that a home reversion plan might be for you, then contact our team at Equity Release Warehouse. Talk to our team for free by calling us on: 0330 058 1579
You can release equity from your property if your property is a leasehold. However, each provider has different criteria when it comes to allowing leaseholders to release equity from their home, including how long is left on their lease.
This is mainly because your chosen lender needs to know that they will be able to sell the property when the lease eventually ends. Your lender will also need some form of confirmation from a property surveyor that the property is in good condition.
It is always important to check with your solicitor and equity release adviser that your leasehold property would be approved for equity release before applying [3].
If you own a leasehold property but are confused about whether or not you would qualify for an equity release plan, then talk to a member of our team at Equity Release Warehouse for more help and information.
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If you are a joint owner of a property, then you will be able to release equity from your home. This includes being both a tenant in common and a joint tenant.
If you are a joint tenant, then you both own the property and when one of you passes away, the other automatically inherits the other’s share in the property.
If you are a tenant in common, then each person owns a set amount of the property, usually split proportionally according to how much deposit everyone put down when they bought the property.
When one individual dies, their share of the property will go to whoever is in their Will, instead of automatically going to the other owner.
Whether you are a tenant in common or a joint owner will affect what type of plan you should apply for. If you are a joint owner, then the equity release loan will remain active until the last living owner passes away or moves into a care home.
If you are a tenant in common, when one owner dies your lender might choose to assess and change your plan according to the circumstances and situation and that time.
If you are a joint owner or a tenant in common and are confused about how taking out an equity release loan would work, then talk to a member of our team at Equity Release Warehouse.
Please call our 24-Hour Helpline: 0330 058 1579
If you are considering equity release in Bournemouth, then you will need to appoint an equity release adviser. Your equity release adviser will be able to talk you through the equity release process from start to finish.
They will also be able to talk you through the risks associated with equity release, as well as the features of each plan and scheme that is available to you. They will be able to talk you through lifetime mortgages as well as home reversion plans.
It is important to remember that all lenders should be regulated by the Equity Release Council as well as the Financial Conduct Authority.
This means that all lenders will benefit from a no negative equity guarantee, meaning that your loved ones will never be liable to pay off the loan after you pass away.
When you speak to an equity release adviser about equity release in Bournemouth, they will ask you a number of questions about your financial situation so that they can offer you the best products and loans that will be right and sensible for you.
At this point, it is incredibly important to be completely open and honest with your advisor, and must make them aware if you do suffer from any debt or have ever been declared bankrupt.
When considering equity release in Bournemouth, you should always opt for a fully qualified equity release adviser who will be able to take your specific situation and only offer loans that you will qualify and benefit from.
What type of loan you will qualify for will depend on the value of your loan, how you want to spend your money and whether or not you are still paying off an existing mortgage.
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If you opt for equity release in Bournemouth, then there are a number of different ways you are able to spend the money you receive.
For example, lots of people choose to spend the money that they receive from their equity release plan on home improvements.
This is a wise decision, as you might want to make your current home more suitable for you and your family as you get older.
This could include things such as installing a ramp, should you need to use a wheelchair as you get older. Likewise, other people might install handrails or a more suitable garden.
Other people choose to gift their equity release money on helping their grandchildren pay off their mortgage, pay for a house deposit or pay for higher education, such as University.
Some others choose to use their equity release money to pay off existing debts or mortgages. This allows pensioners and retirees to have more control over their finances during their retirement, and avoids them having to pay off their debts on a monthly basis [2].
Alternatively, other people might choose to opt for drawdown payments which means that they receive their funds on a monthly basis to supplement their pension and savings.
Whatever you choose to spend your money on, make sure that you are open and honest about how you plan on spending your money with your equity release adviser.
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There are a number of alternatives to equity release if you think that it’s not for you. Whilst not everyone option will be right for you, it is important to consider each one before committing.
For example, downsizing is always a popular way of getting access to more cash. Whilst selling your property and downsizing might not be for everyone, moving to a smaller house might make your retirement years more comfortable.
Others choose to re-mortgage their property, which means extending or amending your current, existing mortgage with a fixed term. Others might opt for a interest-only mortgage, which lasts until you pass away.
Likewise, others might be able to ask family or friends to help them out and lend them some cash. Whilst not everyone is able to do this, buy borrowing from people you know you won’t be charged any interest.
If you are struggling to afford day-to-day costs, then you might want to check to see what you are eligible for when it comes to benefits. By applying for benefits, you will be able to avoid getting yourself into debt or borrowing money from a lender, where you will be charged interest.
Please call our 24-Hour Helpline: 0330 058 1579
At Equity Release Warehouse, we believe that taking out an equity release loan has a whole host of benefits. However, we are here to present you with the entire picture, which means that it’s important to discuss the potential disadvantages when it comes to equity release.
For example, one of the biggest disadvantages of equity release is that you will be charged interest on your loan, which will turn into compound interest.
This means that by the time your next of kin comes to sell your property, they will have to use a significant share of the proceeds of the sale of the house to pay off the loan.
If you decide to opt out of your equity release loan before you pass away or move into a care home, then you might have to pay an early exit fee, depending on the terms and conditions of your loan.
In addition to this, opting for an equity release loan in Bournemouth might also affect any benefits that you are currently entitled to. Opting for equity release can also involve some upfront costs, including the cost of a solicitor and house valuation.
If you are releasing equity to combat the cost of living, then it might be better to first try to see if you can better manage your budget. Below, we list organisations that may be able to help in Aberdeenshire:
Address: Civic Centre, Town Hall, Bourne Ave, Bournemouth BH2 6DY
Telephone: 0808 278 7939
Website: https://www.citizensadvicebcp.org.uk/
Address: 700 Wimborne Rd, Moordown, Bournemouth BH9 2EG
Telephone: 01202 530530
Website: https://www.ageuk.org.uk/bournemouthpooleeastdorset/
You can find further resources on Bournemouth, Christchurch and Poole Council’s websites.
Please call our 24-Hour Helpline: 0330 058 1579
As you can see above, there are some complexities and disadvantages when it comes to equity release. Therefore, it is incredibly important to appoint a solicitor to handle your equity release application and loan.
Your solicitor will be able to handle your contract with your lender and will also be able to move the money across for you.
It is also your solicitor’s duty to ensure that you are aware of all the legal and financial implications of taking out an equity release loan.
Independent legal advice is always necessary when taking out a loan or mortgage and as your equity release loan will last until you pass away, it is incredibly important that you get the very best advice before committing.
If you are considering equity release in Bournemouth, then contact our team of equity release specialists at Equity Release Warehouse. It is not our team’s job to put any pressure on you to make a decision.
Our team is only here to provide you with the best advice and information to support you throughout the process. We will also use our own equity release calculator to work out how money you can release.
Please call our 24-Hour Helpline: 0330 058 1579
[1] https://www.equityreleasecouncil.com/what-is-equity-release/lifetime-mortgage/
[2] https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs65_equity_release_fcs.pdf
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