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Lifetime Mortgage & General Equity Release Advice in Southend-on-Sea
Reviewed by Tom Philips
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Equity release Southend-on-Sea is a really popular way of gaining access to some extra cash later in life.
Equity release involves dipping into the equity inside your home, so that you can spend it on what matters most.
This might be a better lifestyle, a second home, some home improvements or a family holiday [1].
When you release money from your home, the money that you receive will be sent into your account tax free.
You do have to pay interest on your loan and pay off the loan once you pass away or move into a care home permanently, during which time your house will be sold and the loan repaid.
Remember, you are not only paying off the initial loan amount, but also the interest on your loan. This interest will snowball into compound interest, which means that your overall loan amount will increase year on year.
Equity release plans are designed to last for as long as you live, so most equity release loans are only offered to those aged 55 or over, in order to keep the amount of interest charged and overall loan amount to a minimum, so that the loan is repaid in full through the sale of the house once you pass away [1].
As most houses tend to increase in value over the years, the proceeds from the sale of your house should cover the total loan amount.
However, if it doesn’t, your lender will step in and pay the difference. This is called the no negative equity guarantee [1].
The two main types of equity release in Southend-on-Sea and throughout the rest of the UK are called lifetime mortgages and home reversion plans.
Whilst lifetime mortgages will charge you interest on your loan, home reversion plans will not.
However, with home reversion plans, you have to sell a percentage of your home to the lender in order to receive your funds, meaning that your loved ones might not receive as much inheritance as they had hoped for.
With either type of equity release in Southend-on-Sea, you do not have to move out of your home at any point.
Your lender will never have any right to ask you to move out of your home and as long as you stick to the terms and conditions of your loan, you will never be asked to move out of your home or repay the loan until after you pass away or move into a care home.
During which time, your next of kin(s) or lasting power of attorney will be responsible for selling your home and paying off the loan with the proceeds from the sale of your property [1].
Unfortunately, this means that your loved ones and next of kin(s) will not receive as much inheritance as they might have hoped for.
However, you will be able to spend your equity release funds on whatever you want, which could include helping your next of kin or loved ones with a house deposit or paying for further education.
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In order to qualify for equity release Southend-on-Sea, you must be aged 55 or over for lifetime mortgages or 65 or over for home reversion plans.
Whilst each lender’s qualification criteria is different, most lenders will only allow you to release money from your home if your property is worth at least £70,000.
Your property must also be made out of traditional materials. You must also not be in debt in any way, and must not have a CCJ. If you are still paying off a traditional mortgage, then you must pay off this mortgage once you receive your equity release funds.
Your health and age will come into consideration when it comes to qualifying for equity release in Southend-on-Sea. Usually, the older you are, the more likely it is that you will qualify for equity release in Southend-on-Sea.
The value and condition of your home will also have an impact on whether or not you will qualify for a loan as well as impacting how much you are able to release.
If you have someone else living with you, such as a child, grandchild or lodger, then you must make them aware of your plans to release equity and they must sign a declaration form.
It is important that they understand the implication of your plans to release equity, as they will no longer be able to remain living in the property once you pass away or move into a care home. This is because the property will need to be sold to repay the loan.
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If you think that equity release in Southend-on-Sea might be for you, then you will need to speak to an equity release specialist and adviser.
This is a condition most lenders have in place, as per the Equity Release Council’s guidelines.
Your equity release adviser and specialist will want to ask you a number of questions about your home, your health status and why you want to release equity from your home in the first place.
During these initial chats, it is incredibly important that you are open and honest with your adviser, as doing so would jeopardise your application and eligibility with your chosen lender.
Whilst some of these questions might seem personal, it is important that your adviser asks them during the initial stages of your application so that you do not waste any time.
Your equity release adviser and specialist will then use their own equity release calculator to assess how much equity you are likely to be able to release from your home, given the amount of information they have at that time.
They will use your age, your current health status as well as the value and condition of your home at the time in order to make an estimate.
It is important to remember that you are under no obligation to take an adviser or a lender up on an offer.
You are allowed to go away and think long and hard about your decision to release equity from your home, as it could be one of the biggest decisions that you will make.
If you decide that equity release in Southend-on-Sea is the right decision for you, then all you have to do is get back in touch with your equity release adviser and tell them that you wish to proceed.
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One of the biggest downsides to equity release in Southend-on-Sea is that you are often unable to repay the loan early or exit the loan should you wish to do so.
This is often enough to put some people off of equity release in Southend-on-Sea altogether. However, more and more lenders are including an early repayment fee allowance into their terms and conditions [2].
This means that depending on which lender and plan you opt to go for, you might be able to repay a set amount of your loan each year.
Usually, the limit is up to 10% of the total loan amount each year. If you want to repay more than this, or exit the equity release plan altogether, then you will have to fit into one of the following categories.
Most equity release plans in Southend-on-Sea benefit from downsize protection. Downsizing protection allows you to move to a smaller house, without having to pay a penalty.
Some lenders will allow their equity release clients the option to repay their loan early or exit their loan altogether if they have had a significant life event occur.
This includes one of the homeowners passing away. If this were to happen, then your lender would allow you to repay the loan in full, without being charged a fine for doing so.
As explained above, some lenders will allow you to make a small, partial repayment each year.
This is usually capped at 10%, but will go a long way when it comes to reducing the interest on your loan.
This will mean that your overall loan amount might be reduced, and you might have some money left over after your loan repayment is made for inheritance.
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As discussed above, each lender will have different qualification criteria and they will also allow people to release different amounts based on the same criteria.
There are a number of factors that will determine how much equity you are able to release from your home, including your age, your health and the value of your home. Some of these factors are discussed further below and in more detail.
Firstly, your age and your current health status will have a huge impact on how much equity you are able to release from your home.
As equity release in Southend-on-Sea lasts for as long as you do, your lender will naturally be interested in how old you are and whether you suffer from any health conditions or not.
This is why you have to be honest with your lender about any health conditions, as hiding this, even in the early stages of your application could have a huge impact on your eligibility for equity release in Southend-on-Sea.
Likewise, your lender will also want to assess how much your property is now wroth as well as what condition your property is in.
This is why all lenders will send someone to your property to complete a home valuation.
This will give them a good idea of the current value of your home, so that they are able to assess how much money you are likely to be able to release from your home.
Naturally, every lender wants to be assured that they will get their money back, plus any interest that they will charge you.
So, your lender needs to be confident that they will get their money back and that your home will not decrease in value.
Any outstanding debt will have a huge impact on whether or not you qualify for equity release in Southend-on-Sea or how much you are able to release if you do qualify for equity release.
If you do have any debt, then you will need to clear this as part of your equity release application. This will include any traditional mortgages.
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Yes, taking out equity release in Southend-on-Sea is a safe option, as long as you think long and hard about doing so before making any decisions.
The equity release industry in Southend-on-Sea and throughout the rest of the UK is now highly regulated, making it a safe option for those who truly understand the ins and outs of their equity release plan and contract.
As with any type of loan, there are always risks involved. These risks are explained further below in this article.
However, increased regulation has meant that the industry now benefits from a number of mandatory clauses, including the fact that every equity release plan offered to people living in Southend-on-Sea and throughout the rest of the UK must include downsize protection as well as a no-negative equity guarantee.
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Unfortunately, one of the biggest downsides to equity release in Southend-on-Sea is that the amount of inheritance you are able to leave a loved one is reduced.
This is because most people leave their loved ones their property as inheritance. When you take out an equity release loan, the proceeds from the sale of the house will have to go towards paying off the loan, instead of to your loved ones as inheritance.
However, some equity release loans in Southend-on-Sea are able to allow you to ring-fence a certain percentage of the value of your home, so that you are able to leave a small amount as inheritance.
This is essentially inheritance protection. It is important to understand that your tax situation might be affected by taking out equity release in Southend-on-Sea.
Whilst the money that you release will be tax free, your tax obligation will change if you want to invest any of the money.
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Each equity release loan in Southend-on-Sea will take a minimum of 8 weeks to process and usually maximum of 12 weeks to complete.
How quickly your loan processes will depend on a number of different factors, including how quickly your solicitor is able to process your application, what type of equity release loan you are applying for as well as how complex and complicated your equity release loan is.
As with any type of mortgage, you will need to chase your solicitor to process your loan if you are under a tight deadline.
It is important to submit any necessary documents on time and to keep in touch with your adviser and solicitor most weeks to check up on the process of your equity release application.
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Equity release in Southend-on-Sea can be used for a range of different things, including home improvements, a family holiday, helping loved ones with their University fees or home deposits or for a better lifestyle [3].
The majority of people who apply for equity release in Southend-on-Sea still have a little bit left to pay off on their mortgage.
If you still have anything left on your mortgage, then you will be asked to pay this off once you receive your money.
This means that you will be mortgage-free going into your retirement, and you will then be free to spend your time doing things that you enjoy, without having to worry about paying off your mortgage each month.
Other people choose to release money from their home so that they can make some home improvements.
Not only will this add more value to your property when it comes to selling, but it will also make your property a nicer and more comfortable environment for you to grow old in.
There are all sorts of home improvements that you can make to your home which will increase the value and make your home more comfortable for you, including an extension, a stair lift, ramps, an accessible bathroom and a new garden.
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Thirdly, lots of people who release equity from their home choose to help their family financially with the money that they receive.
This includes things such as paying for your loved ones’ house deposits, mortgages or paying for further education including University fees.
Whilst taking equity release does not always ensure inheritance for your loved ones, by spending the money on them whilst you are still alive, you will get to see what your money can do for your family.
Finally, a lot of people who release equity from their home in Southend-on-Sea simply want to live a better lifestyle.
This might include more money for family holidays, joining a gym, health club or golf club or simply shopping at better places.
Lots of people wait their entire lives to enjoy their retirement and they deserve to spend their retirement living the lifestyle they want to.
Yes, you are able to spend your equity release money on a family trip should you decide to.
In fact, spending your equity release funds on a family trip might be the perfect way for you to make the most of your money and the time you have left with your family and your loved ones.
Making memories is arguably one of the best ways to spend your money.
However, it is important that you are sensible with your money and do not blow it all at once.
If you have a mortgage to pay off, then you will always need to spend your money on paying off this mortgage first before spending it on anything else.
If you have bills to pay, then likewise, you will always need to pay off these bills first before doing anything else.
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No, if you want to release equity from your home, then you will need to be aged at least 55 or over in order to qualify.
This is because equity release in Southend-on-Sea lasts for as long as you live or until you move into a care home. Each year that your loan continues, you will be charged a significant amount of interest [4].
Your equity release loan in Southend-on-Sea could continue for anything between a few years, to twenty. This means that you are likely to rack up a considerable amount of interest on your loan over the years.
The more interest you are charged, the more you will have to repay once you pass away and your house is sold. If the proceeds from the sale of your house do not cover the loan amount, then the no negative equity guarantee ensures that your lender pays the difference.
Hence, most equity release lenders in Southend-on-Sea will not offer you an equity release loan if you are under the age of 55, as they want to ensure that you are going to be able to repay your loan, as the proceeds will cover the full loan amount.
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Equity release in Southend-on-Sea involves a number of set-up costs, including the cost of an adviser, a home valuation and an equity release solicitor.
Usually, an equitable loan will cost you anything between £1,000 and £3,000, which is usually payable once you receive your equity release money. However, a select few advisers or solicitors might ask for their money before this.
It is also important to remember that for every equity release loan and lender will charge you interest on your loan, meaning that for every year the loan continues, your overall loan amount will increase.
As all interest rates are fixed, you will be able to work out exactly how much you will end up owing before you officially sign for your equity release loan.
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As discussed above, all interest rates are fixed when it comes to equity release in Southend-on-Sea.
This means that, unlike traditional loans, your interest rate won’t fluctuate higher or lower every couple of years. Instead, it will be fixed for as long as your loan continues, so for as long as you live.
Remember, the interest on your equity release loan will compound over time, so the longer your loan continues, the higher your loan amount will be.
However, there are ways and means of reducing your overall loan amount by paying off some of this interest each year, whilst you are still alive.
Whilst some lenders might put a limit on how much interest you can pay back each year, paying off even a little each year can go a long way when it comes to reducing the amount of compound interest that rolls up year on year.
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At Equity Release Warehouse, we believe that the benefits of equity release in Southend-on-Sea outweigh the negatives.
There are numerous benefits associated with equity release in Southend-on-Sea, including the fact that the money you receive is tax-free, and that you are able to spend the money you receive on whatever you want.
You also do not need to repay a penny of the loan until after you pass away or move into a care home.
This means that you can spend your loan on whatever you want and do not have to worry about making monthly or annual repayments.
In this time, you will remain the sole owner of your property and no lender has the right to ever ask you to move out of your home, as long as you abide by the terms and conditions of your loan.
Despite common belief, you are also allowed to move home in the future, should you wish to do so.
This is common amongst most equity release loans and lenders in Southend-on-Sea, as long as the property you are moving to is a smaller property.
This is called downsize protection and allows borrowers the chance to move to a smaller property without being charged an early repayment fee.
The basis of all equity release loans in Southend-on-Sea is that you will never repay more than the loan is worth. This is called the no negative equity guarantee.
This guarantee ensures that even if your home decreases in value so much that the proceeds from the sale of your home no longer cover the loan amount, your lender will step in and pay the difference.
This means that your next of kin(s) and loved ones will never be responsible for having to pay off a penny of your loan.
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If you are considering equity release in Southend-on-Sea, then it is important that you consider the risks and disadvantages of equity release in order to make an informed decision.
Below is a list of all of the risks associated with taking out an equity release loan, which should be acknowledged and carefully considered.
If you are confused about any of the below points, then it is important that you speak to an equity release specialist about your concerns before jumping to a decision [5].
Compound interest is an inevitable part of any loan, especially when it comes to equity release. Equity release loans in Southend-on-Sea continue for as long as you live, or until you move into a care home.
For this reason, compound interest is a huge disadvantage when it comes to equity release in Southend-on-Sea.
Compound interest essentially means that your loan amount will snowball over time, as your interest will be charged interest.
This could eventually mean that your loan amount will no longer be covered by the proceeds from the sale of your home, depending on how much your loan amount is and how long you live for.
If you are concerned about compound interest and what it might mean for you, then talk to a member of the Equity Release Warehouse team for help and support.
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In addition to compound interest, taking out equity release in Southend-on-Sea will also have a huge impact on your eligibility for any means-tested benefits.
This will include any means-tested benefits that you are currently receiving or any that you are due to receive in the future, too.
Means-tested benefits include things such as council tax support, pension credit, savings credit or any other types.
If you are currently receiving these benefits and decide to take out equity release in Southend-on-Sea, then you should expect your benefits to stop or at least reduce, at least.
This means that you will need to weigh up the pros and cons of taking out equity release in Southend-on-Sea, as doing so might bring more harm than good.
If you are currently receiving any means-tested benefits and are curious about releasing equity from your home in order to release more funds, then speak to a member of the Equity Release Warehouse team for more help and support.
Please call our 24-Hour Helpline: 0330 058 1579
One of the biggest negatives associated with equity release in Southend-on-Sea and throughout the rest of the UK is that if you choose to leave your loan and repay the loan early, then you will be charged an early repayment fee, or charge (ERC).
With most lenders, you are usually allowed to repay up to 10% of your loan each year, in order to keep the amount of compound interest you are charged at bay.
By just repaying a little, you will be able to reduce your overall loan amount significantly.
Lastly, releasing equity from your home in Southend-on-Sea means that your inheritance will be reduced. Most people leave their property to their loved ones as inheritance.
However, when you release equity, your loved ones will have to sell your home and use that money to repay the equity release loan.
This is why if you are considering taking out equity release in Southend-on-Sea, then you should speak to your family and next of kin(s) about doing so, so that they are kept in the loop from the offset, to avoid any arguments or disagreements later down the line.
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Equity release in Southend-on-Sea might affect your choices when it comes to your healthcare as you get older.
This is because all equity release loans in Southend-on-Sea have to be repaid, in full, when the owner of the property either moves into a care home or passes away.
However, some people who move into a care home might not be ready to sell their home and repay their loan, for whatever reasons [6].
This means that individuals who release equity from their home might choose to avoid moving into a care home.
In preparation for this, you should save some of your money to pay for at-home care, including the cost of care workers.
If you are worried about your long-term care costs, then speak to a member of the Equity Release Warehouse team for advice and support.
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Negative equity is when your property decreases in value so much so that it becomes less than the loan amount. This means that you aren’t able to sell the house for what you originally bought it for, for whatever reasons.
There are a number of different reasons why your house decreases in value, including a recession or market crash [7].
Whilst this can be an incredibly scary situation for homeowners, all equity release clients are protected by the no negative equity guarantee.
This guarantee ensures that if you do fall into negative equity and that the proceeds from the sale of your home do not cover the loan amount, then your lender will pay off the rest of your loan, to save your next of kin(s) and loved ones being responsible for doing so.
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If you want to apply for equity release in Southend-on-Sea, then you will need to hire a solicitor to handle the legal aspects of your loan.
This is called the conveyancing process, and lasts around 8 – 12 weeks, depending on a number of factors.
Your solicitor will write up your contract and agreement and will go through the ins and outs of your agreement with you so that you understand all legal aspects of your loan.
They will work as the middleman between you and your lender so that you do not have to deal with your lender as much as you would think.
They will even handle the exchange of money on the day that you receive your equity release money.
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If you want to release equity in Southend-on-Sea, then you will be able to choose from lots of different lenders, depending on their different qualification criteria.
Below is a list of some of the most popular equity release lenders used across Southend-on-Sea and the rest of the UK:
If you want to see which lenders you would qualify for, then speak to an equity release specialist or to a member of the Equity Release Warehouse for help and support.
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The equity release industry has come on leaps and bounds over the past few decades, mainly due to the increase in regulation across the industry.
For this, we all have a list of regulators to thank, including some of the financial and legal regulators listed further below:
The Equity Release Council is also on hand to ensure that all players across the equity release industry are working to the same standards and are working in the best interests of their clients.
They promote certain values and standards across the industry and have played a huge role in improving the quality and trust across the equity release industry over recent years.
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Yes, you are allowed to release equity even if you have an interest-only mortgage. However, it is imperative that you use the equity release funds to pay off the final lump sum of your mortgage.
An interest-only mortgage is when you only repay the interest on your mortgage each month, instead of the actual loan amount.
You are allowed to do this for the duration of your mortgage term until your term comes to an end. When this happens, you have to repay the total loan amount, in one large lump sum [8].
In order to qualify for an interest-only mortgage in the first place, you must prove that you are able to repay the lump sum, whether that is through future inheritance or some other means.
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Equity release in Southend-on-Sea is not for everyone. There are numerous alternatives to equity release, including some of the alternatives listed below.
It is important to remember that equity release is only available to individuals aged 55 or above, so is not available to everyone.
If you are in need of some extra cash but are not able to apply for an equity release loan for whatever reason, then some of the below alternatives might be more applicable to you:
If you are under 55 years old and are struggling for some extra cash, then it is important to assess your finances and work out where best you can budget plan.
Budgeting planning is an incredibly important part of managing your finances and should be done before considering taking out a loan, borrowing money from a family or friend or applying for an equity release loan.
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[1] https://www.equityreleasecouncil.com/what-is-equity-release/
[4] https://www.moneysavingexpert.com/mortgages/equity-release/
[5] https://www.thetimes.co.uk/money-mentor/article/equity-release/
[7] https://www.hsbc.co.uk/mortgages/what-is-negative-equity/
[8] https://www.natwest.com/mortgages/mortgage-comparison/interest-only-mortgage.html
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