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Lifetime Mortgage & General Equity Release Advice in County Durham
Reviewed by Tom Philips
Get in touch today on 0330 058 1579 for a free, zero obligation consultation. We can help you locate equity release advisors in your local area.
Equity release is a form of loan used by those aged over 55 in the UK. Equity release County Durham is an increasingly popular option, which helps people gain access to the equity that is currently locked in their house.
Think about it, how much do you think your house is now worth? How many years have you been living there, adding to the equity through your monthly mortgage repayments?
Add this to the initial deposit that you put down on the house when you first bought it and you will realise that you are sitting on a large amount of equity that you currently have no access to.
When you release money from your home using an equity release scheme, you are able to receive your equity tax-free either in one large lump sum (a lump sum lifetime mortgage) or through a number of smaller payments (a drawdown plan) or a combination of both.
When you opt for equity release in County Durham, you do not have to pay off your loan whilst you are still alive. You will only have to pay off the loan after you pass away or move into a care home. When you do so, your house will be sold by your loved ones.
Any money from the sale of the house will go towards paying off the equity release loan, as well as any interest. If there is any money left over, this will be handed to your loved ones and next of kin as an inheritance.
A big part of equity release County Durham is interest. As with any loan in the UK, you will need to pay interest on the money you receive. With equity release loans, these interest rates are usually higher than they are with other types of traditional mortgages.
Due to this, some lenders allow you to repay your loan back early by paying off some of the interest on your loan in monthly or annual payments. Some of the reputable lenders the financial advisors will research on your behalf include Scottish Widows, Legal & General, Aviva, Liverpool Victoria (LV), Canada Life, more2life, Hodge, Just Retirement, Pure Retirement, One Family and LiveMore Mortgages.
This will reduce the overall loan amount and will help to make sure that your loved ones receive some inheritance as there will be less to pay off upon the sale of the house.
If you choose not to pay off any interest on your equity release loan, then you should be prepared for this interest to compound over time. Compound interest will mean that you will end up owing more at the end of your loan than you would if you paid it off as you go.
When it comes to choosing an equity release scheme in County Durham, there are two main types of loans. These are known as lifetime mortgages and home reversion schemes. Both of these plans are explained further below in more detail.
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Lifetime mortgages are the most popular option for anyone aged over 55 years old and living in the UK. With lifetime mortgages, you are able to release equity from your home without having to make any repayments whilst you are still alive if you don’t want to.
With lifetime mortgages, all interest rates are either fixed or at least capped, meaning that they will not go up and down in line with set interest rates from the Bank of England.
With lifetime mortgages across County Durham, you are able to choose from getting your money in one large lump sum (also known as a lump sum lifetime mortgage) or through smaller payments which you can choose to receive whenever you want (also known as a drawdown lifetime mortgage).
When you pass away or move into a care home for health reasons, your next of kin will need to sell your property. Upon sale of the property, the proceeds will be used to pay off the loan and anything left over will go to your next of kin as inheritance money.
With both lump sum plans and drawdown plans, you will be charged interest. It is incredibly important to understand how interest works before you take out your equity release loan.
For example, it is important to understand that if the interest on a loan is not paid off, then it will compound.
This compound interest increases the total loan amount, and in the case of equity release, it also means that you will be leaving less inheritance to your loved ones and next of kin.
At Equity Release Warehouse, we suggest that you do pay off the interest on your loan. However, there is a cap as to how much interest you are allowed to pay off, which is usually capped at 10% of the total value of the loan each year.
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Home reversion plans are a lot less popular across County Durham and the rest of the UK for a number of reasons.
As with a lifetime equity release mortgage, any money you receive will be taxed free. However, when you choose a home reversion plan, you sell a percentage of your property there and then to the lender. This will be for a lot less than market value.
This also means that when your loved ones sell your house after you pass away, the lender will receive whatever percentage of the sale of the house they own. This means that if you sell 40% of your home to the lender in return for access to your money, the lender will receive 40% of the sale of the house.
The great thing about home reversion plans is that you get to remain living in your house and do not have to pay any rent on the percentage of the house that you sold.
If the value of the house increases, then so does the amount of money that the lender will receive. As you can picture, choosing a home reversion plan might mean that your loved ones receive less inheritance after you pass away.
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Equity release County Durham is an increasingly attractive option to those aged over 55 years old and currently wanting more access to equity in their home.
In fact, the Equity Release Council [1] has released the latest statistics behind equity release in order to highlight just how popular this offering is to individuals across County Durham and the rest of the UK.
The Equity Release Council have revealed that approximately 200 every day take out a new equity release loan [1].
Between April and June 2022, a staggering 12,485 new equity release loans were taken out, partly due to the fact that in March 2022 a new penalty-free agreement was introduced, allowing people to repay early without any penalties [1].
There has been a 26% increase of equity release plans compared to 2021, due to restrictions caused by the Covid-19 pandemic [1].
In terms of how much money people are releasing from their home in the UK, this figure has remained steady over recent years. In fact, most people release approximately £135,000 from their home [1].
As ever, people are continuing to lifetime mortgages over home reversion plans. However, for the first time in just over a decade, people are choosing lump sum lifetime mortgages over drawdown lifetime mortgages [1].
The Chairman of the Equity Release Council has recently opened up about why equity release is continuing to be such a popular option for those aged over 55 years old across the UK.
He stated that the industry is improving in transparency and research, and started to improve long before the Covid-19 and cost of living pandemic [1].
He has put this down to the fact that equity release advisers and lenders across the UK are working harder than ever to educate and inform the general public on how equity release products work and are also working hard to find the right products for their clients.
He also cited the increase behind the increase in lump sum products being down to the fact that more and more people are choosing to give their equity release funds to other people.
This is probably down to young people struggling during the cost of living crisis, with their parents and grandparents choosing to help them by releasing equity from their home.
The Equity Release Council has also cited that more and more people are choosing to pay back their interest as they go, whilst they are still alive. This not only reduces the total loan amount but it also increases how much inheritance your loved ones will receive [1].
Interest rates rose from historic lows after the Covid-19 pandemic and this will most likely increase how much people will owe if they take out an equity release loan in the next few years [1].
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If you are considering equity release in County Durham, then there are a number of things you should be aware of before you file your official application. For example, there are a number of qualification criteria factors you will need to meet before you can qualify for equity release in County Durham.
If you are considering equity release in County Durham, then you will need to be aged over 55 years old if you want to qualify for a lifetime mortgage, and at least 60 years old if you want to qualify for a home reversion plan.
Your property also needs to be in the UK and it must be worth at least £70,000. This property also needs to be your main residence and must be in reasonable condition.
You will also need to pay off the majority of any existing mortgage with the equity release loan you receive.
There is a chance that you might not qualify for your equity release loan if you have anyone else living with you, such as children, grandchildren or a tenant.
It is also recommended that if you do live with anyone else and are considering equity release in County Durham, then they should seek their own legal advice and be well aware of what will happen to them and their home when you pass away or move into a care home [2].
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When it comes to equity release in County Durham, there are lots of differences between each plan and scheme, which sometimes makes it difficult to decide whether equity release is for you or not.
There are many advantages to equity release in County Durham, but there are also a few disadvantages to consider as well.
At Equity Release Warehouse we make it our mission to make sure that everyone who is considering equity release in County Durham and the rest of the UK are well informed of the pros and cons of equity release, and are given the full picture.
When you first speak to a member of the Equity Release Warehouse team, you will talk to your advisor about all the pros and cons of equity release in County Durham.
They will be keen to show you all aspects of equity release, including the good and the bad. Some of these advantages and disadvantages are listed below for you to read.
There are potential disadvantages to equity release. We urge you to read our article on this, and you should be able to make an informed decision.
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 County Durham:
Address: 15 Church Chare, Chester-le-Street DH3 3BQ
Telephone: 0300 330 9027
Website: http://citizensadvicecd.org.uk/
Address: 54A North Rd, Durham DH1 4SF
Telephone: 0300 330 9027
Website: http://citizensadvicecd.org.uk/
Address: Armstrong House, (not open to public), Abbeywoods Business Park, Durham DH1 5GH
Telephone: 0300 330 9027
Website: http://citizensadvicecd.org.uk/
Address: Durham DH1 1TW
Telephone: 0191 386 3856
Website: http://ageukcountydurham.org.uk/
You can also get more information from Durham County Council’s website.
If you want more information on the pros and cons of equity release in County Durham, then call our friendly team at Equity Release Warehouse.
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There are lots of different aspects to equity release in County Durham, which should be explored with your equity release advisor during one of the very first meetings you have with them.
Equity release in County Durham can be deemed as complex at first. However, once you sit down and talk through the ins and outs of equity release then you will realise then it is actually a lot more simple than you initially thought.
Most people do not know that when you opt for equity release in County Durham, you are able to choose from either a lump sum or a drawdown plan. This means that you can either gain access to your money in one large lump sum or through a number of smaller payments.
For some people, this makes more sense for them and their current financial situation.
In fact, approximately 55% of people who took out an equity release plan took out a drawdown lifetime plan. By doing so, you will find that you have a lot more flexibility with your loan and will always be able to release more in the future if you choose to.
Most equity release clients choose not to repay their equity release loan until after they pass away or move into long-term care.
This is because they want to enjoy their equity release and later years without having to worry about any repayments, now that their mortgage is out of the way and has been taken care of.
However, everyone knows that if you leave interest and do not pay it off, then it will grow into compound interest pretty quickly. By turning into compound interest, this will increase the overall loan amount and before you know it, things will snowball.
In order to avoid experiencing compound interest, you should choose to pay off some of the interest on your loan before you pass away. This will increase the amount of inheritance you leave for your loved ones.
Many people cite the No Negative Equity Guarantee as one of the best and most important features of an equity release plan. It is incredibly important for those who have taken out an equity release loan that they are still able to leave an inheritance for their loved ones after they pass away.
The Equity Release Council ensures that all equity release schemes across County Durham and the rest of the UK have a no negative equity guarantee in place.
This guarantee ensures that even if your house decreases in value and no longer covers the cost of the equity release loan, the lender will cover the difference. This means that you will never leave your next of kin under any pressure or financial difficulties.
Most people aged 55 or over do not want to move homes. This is mainly because moving home is particularly stressful and difficult to do, especially when you lead busy lives and aren’t getting any younger.
Due to this, a lot of people need reassurance that they will never be asked to move house if they take out an equity release loan. You will be happy to hear that you will never be asked to move house or pay rent on your house if you opt for a lifetime mortgage or a home reversion plan.
In fact, the Equity Release Council has worked hard over the years to ensure that this is the case.
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Unfortunately, equity release in County Durham and throughout the rest of the UK has a poor reputation. Equity release has been around for years, and unfortunately, there are a lot of misconceptions surrounding equity release.
The industry has changed a lot over these years, so it is no longer why people are confused about some of the facts. Unfortunately, the industry has not always been as regulated as it is now.
The Equity Release Council have worked endlessly over the past few years to make the industry more fair and responsible.
The equity release industry is now proud to be fully regulated by the Equity Release Council and the Financial Conduct Authority.
If you are considering equity release in County Durham, then you can be rest assured that the industry is now fully regulated, and every equity release advisor will advise you with the best and most relevant information.
Unfortunately, you are only able to release equity from your home if you are aged over 55 years old. Most people who are nearing 55 years old wait until they are eligible to apply. However, others might be a bit more desperate to get their hands on money.
If you are aged under 55 years old and need to access more cash quickly, then we recommend that you speak to a mortgage adviser as soon as possible. They might recommend that you re-mortgage your property or that you speak to an independent financial advisor if your situation requires more detailed attention [3].
Re-mortgaging your house is a highly common tool people use to lower your monthly mortgage repayments.
More and more mortgage lenders across County Durham and the rest of the UK are increasing their upper age limits, allowing more people to re-mortgage their properties [3].
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Unfortunately, lots of people across County Durham and the rest of the UK see equity release as a really expensive way of gaining access to more money.
This is usually because interest rates on equity release schemes are more expensive than interest rates on normal, traditional mortgages.
Interest rates for equity release plans usually sit at anywhere between 4% and 5%, but this could increase over time. It is also important to remember that getting the lowest interest rate does not always mean that you have the best deal.
You must remember that by choosing equity release in County Durham, you are taking out another form of loan. As with any loan, you will have to repay interest which will compound overtime.
In addition to this, there are also a number of different set up costs associated with equity release in County Durham. This includes the cost of an equity release advisor, the cost of a solicitor and the cost of someone to come and value your house.
These costs differ depending on who you choose to go with, and how complex your equity release plan is. However, these costs can set you back anywhere between £1,000 and £4,000 and will need to be paid upfront in some cases.
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If you are considering equity release in County Durham but do not know where to start, then you are not alone. You can start by talking to one of our advisers about what plans might best for you given your current situation.
It is normal for your equity release adviser to ask you why you want to release equity from your home in the first place, so be prepared to give an explanation behind your motives.
Your equity release advisor from Equity Release Warehouse will never put any pressure on you to make a decision. The decision is entirely up to you, and your adviser is only there to educate and inform you.
Your adviser will use their very own equity release calculator to make an accurate plan for you, based on the value of your home, your age and the quality of your home. It is incredibly important to be open and honest with your advisor so that they can make a fair and informed assessment.
If you would like to speak to our team, call us today on 0330 058 1579 for free and helpful advice on equity release in County Durham.
Access help and advice today across County Durham in Barnard Castle, Birtley, Bishop Auckland, Darlington, Durham, Evenwood, Newton Aycliffe, Peterlee, Spennymoor, Staindrop, Stanley and Trimdon.
[1] https://www.equityreleasecouncil.com/news/q2-2022-equity-release-market-statistics/
[2] https://www.rbkc.gov.uk/media/document/equity-release
[3] https://www.ownyourhome.gov.uk/scheme/help-to-buy-2021-2023/
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