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Lifetime Mortgage & General Equity Release Advice in Sunderland
Reviewed by Tom Philips
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Equity release Sunderland is a type of loan, only available to those aged 55 or over.
You take out an equity release loan on the basis that when you pass away, your house is sold and the proceeds from the sale of the home are used to pay off the initial equity release loan, plus any interest you have been charged.
This means that your equity release loan will last for as long as you live, or until you move into a care home.
You aren’t taxed on any of the money that you receive, although you will be charged interest.
This interest will be charged every month or year that your loan continues and will turn into compound interest.
Compound interest is essentially interest on your interest, which will increase the overall loan amount by quite a bit [1].
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You only have to repay your loan once you pass away or move into a care home. When this happens, your next of kin will sell your home and use the money from the sale of the property to pay off the loan amount.
As houses typically increase in value over the years, the proceeds from the sale of the home are usually enough to cover the loan amount.
Even if they do not, then the lender will have to pay the shortfall, as per the terms and conditions of the no negative equity guarantee. This protects you and your loved ones from any negative equity.
The best thing about equity release in Sunderland is that there are few restrictions on how you can spend your money.
Whilst some people use their equity release money to live a better lifestyle or make some home improvements, others choose to gift their funds to their family or grandchildren, for University fees or house deposits.
You’re also well within your rights to use the money on a family holiday or a new car if that’s what you want to do [1].
There are two main types of equity release in Sunderland, which are lifetime mortgages and home reversion plans.
These two types of plans are the most popular types of equity release in Sunderland, and guarantee you the chance to gain access to your money whilst being able to remain living in their home for as long as you want [1].
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Lifetime mortgages are the most popular type of equity release Sunderland used throughout Sunderland and the rest of the UK.
With lifetime mortgages, you remain the sole owner of the property and do not have to sell your home for access to your equity release funds.
However, you will be charged interest on a lifetime mortgage, which will roll up and turn into compound interest over the duration of your equity release loan.
However, home reversion plans work a little bit differently. Home reversion plans are less popular than lifetime mortgages because they involve selling a percentage of your property to a lender in exchange for your equity release money.
This could be as much as 90% of your property or as little as 10%, and how much you decide to sell is entirely up to you and how much equity you want to release.
With home reversion plans, you do not need to pay interest on your loan.
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Equity release in Sunderland is supposed to last for as long as you live and isn’t designed to be paid back early.
However, compound interest poses a real problem for individuals who want to leave some inheritance for their loved ones, or who think that their property might decrease in value for whatever reason [2].
In an attempt to ensure that they are able to leave some inheritance for their loved ones, or to ensure that the sale of their property covers the full loan amount, individuals might choose to repay a small percentage of their loan back each year, in an attempt to reduce the amount of compound interest that is charged.
However, most equity release lenders and providers in Sunderland will charge you what is called an early repayment charge or fee for repaying your loan back early.
This can be a significant amount of money and is enough to put the majority of people off of repaying their loans for life.
However, there are a few exceptions, where lenders will allow you to repay your loan back early. These exceptions are listed and explained further below for you [2].
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According to the Equity Release Council (ERC) all equity release plans in Sunderland and the rest of the UK should include what is called downsize protection.
This type of protection allows you to move home to a smaller property after taking out an equity release loan, as long as that property is smaller and cheaper than your current property.
The downsize protection on your loan will enable you to do this without being charged an early repayment charge or fine.
If a member of the agreement and one of the owners passes away, then you will be granted a significant life event exemption, which will allow you to repay your equity release loan back early, without being charged a fine for doing so.
Finally, a handful of equity release lenders in Sunderland will allow you to repay a percentage of your equity release loan every year, although this is usually capped at 10%.
Whilst this might not seem like a lot, it will go a long way to ensuring that the amount of interest you are being charged is kept at bay.
If you want to release equity from your home in Sunderland but are put off by the idea of early repayment charges and fines, then talk to a member of the Equity Release Council for more help and support on how you can navigate this side of equity release Sunderland.
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How much equity you are able to release from your home in Sunderland is heavily influenced by a number of factors, including your age, your health, the value and condition of your home and whether or not you are or have suffered from debt.
These factors are explained further below for you:
Your age and your health are the biggest determining factors when it comes to how much equity you are able to release from your home.
As equity release loans for as long as you live or until you move into a care home, the amount of interest you are being charged will increase year on year, until it reaches a significant amount.
Naturally, the banks are happier the more compound interest they are able to charge.
However, the lenders also want to ensure that they will get their money back via the sale of your home, otherwise, they have to step in and pay for the shortcomings.
Naturally, they want their loan to be paid off via the sale of your home, so do not want too much interest to compound, as they will have to step in.
Therefore, lenders won’t allow anyone under the age of 55 to release equity, as this gives too much time for interest to compound.
Therefore, the older you are, the more likely it is that a lender will approve you for equity release in Sunderland and allow you to release more equity from your home, as the belief is that they will not have to wait too long until they get their money back.
The same can be said for your health.
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The value of your property will also naturally have a huge impact on how much equity you are able to release from your home.
The higher your house is valued, the more you will be able to release from your home.
Your equity release lender in Sunderland will want to send someone to your property to carry out a home valuation on your house.
This includes assessing the exterior and interior of your property so that they know how much your home is worth.
Finally, your equity release lender will also want to know if you suffer from any outstanding debt, apart from any outstanding mortgages.
If you suffer from any outstanding debt, then you will have to repay this before receiving your equity release money.
If you have ever received a CCJ, then you might not get approved for an equity release loan altogether.
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The conveyancing process takes around 8 – 12 weeks to process when it comes to equity release Sunderland.
Your loan will be submitted via your equity release adviser and solicitor. Your equity release solicitor will submit all of your paperwork on your behalf and will act as the middleman between you and your lender.
Once you apply for equity release in Sunderland, your lender will send someone to your home to carry out a home valuation.
Once this is completed, your official offer will be made. From here onwards, your loan will still take a number of weeks to process.
When your loan and conveyancing process is complete, your solicitor will be the one to transfer funds into your bank account, rather than it coming directly from your lender.
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Equity release in Sunderland costs approximately £1,000 – £3,000 to set up initially.
This includes costs such as the cost of a solicitor, an equity release specialist, a home valuation and any other set-up fees that might be necessary to get your equity release application over the line.
It is important not to forget that your equity release loan will also include interest. This interest will be charged on either an annual or monthly basis and will turn into compound interest over the years.
Most equity release lenders, advisors and solicitors will allow you to repay the loan once you receive your funds, rather than beforehand.
However, this needs to be discussed with your lender, your adviser and your solicitor prior to taking out an equity release loan.
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Yes, you still remain the sole owner of your property if you take out a lifetime mortgage in Sunderland.
No matter what, your lender will never ask you to move out of your home for any reason. If they do, then this might be a sign that the adviser you are speaking to is looking to scam you.
You will only ever be asked to move out of your home and sell if you are to move into a care home for health reasons.
Likewise, your house will only need to be sold once you pass away or move into a care home.
When you apply for a home reversion plan, you will have to sell a percentage of your home to your chosen lender in exchange for access to your equity release funds.
This means that when you pass away or move into a care home and your property is sold, the proceeds from the sale of the house will go to the lender and anything left over will go to your loved ones and next of kin(s) as inheritance.
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When it comes to equity release in Sunderland, it is important to remember that all interest rates will be fixed.
This means that your interest will stay the same throughout the duration of your equity release lender. Instead of changing and fluctuating every few years, as with a traditional mortgage or loan, your equity release interest rate will always stay the same, no matter what happens [3].
This means that your adviser, solicitor and lender will be able to work out and estimate your total loan amount, as they are able to project exactly how much money you will owe after 5 years, 10 years, 15 years or even 20 years [3].
Your interest rate will be stated on your official loan offer, which will be sent to you before officially taking out your equity release loan.
Each lender will have different interest rates, so it is best to speak to an equity release adviser about which lenders offer the best and most competitive interest rates.
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There are a whole host of benefits associated with equity release in Sunderland, which our team at Equity Release Warehouse are extremely passionate about.
Accessing the equity that has built up in your home will allow you to live your retirement years, stress-free and without having to worry about your money [4].
You are able to gain access to your equity either in one large lump sum or through a number of smaller payments.
Which type of payment you receive will depend on what you are planning on spending your equity release money on.
This leads us to the other benefit of equity release in Sunderland, which is that there are very few limits on how you spend your equity release money.
Some people choose to spend their equity release money on treating themselves to a new car or holiday, whereas others invest their money on some home improvements including an extension, a new kitchen or some alterations to your home including some ramps or a stair lift.
Not only will making some home improvements to your property increase the value of your home, but it will also make your home and more comfortable and suitable place to live the rest of your retirement [4].
Additionally, you aren’t expected to pay off your equity release loan until after you pass away or move into a care home.
However, you are able to repay the loan early if you choose to do so. This will keep the amount of interest you are charged at bay.
As you can see, there are numerous benefits associated with equity release in Sunderland.
However, if you are seriously considering taking out an equity release loan, then you will need to consider the risks and disadvantages of equity release as well as the pros and benefits.
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As discussed above, if you want to release equity from your home in Sunderland, then it is important that you are aware of the risks and disadvantages associated with equity release in Sunderland as well as the pros and advantages which are explained above.
For example, the biggest risk of taking out equity release in Sunderland is that your overall debt is increased.
Not only are you taking out a loan, but you are also being charged interest on your loan which will compound over the years.
Although most people are able to repay the loan with the sale of their home, this does mean that there most likely won’t be anything left for your loved ones as inheritance after the loan is paid off [5].
Likewise, taking out equity release in Sunderland will have a huge impact on your eligibility for any means-tested benefits.
This includes things such as council tax reduction. Even if you do not currently receive these benefits, this does not mean that you won’t in the future.
So, if you are considering taking out equity release in Sunderland, then it is worth thinking long and hard about how doing so might impact any future means-tested benefits or claims [5].
The idea behind equity release in Sunderland is that you only have to repay the loan once you pass away or move into long-term care.
This means that most equity release providers will charge you an early repayment fee, which could be more than 10% of the total loan amount.
Finally, you won’t leave your loved ones as much inheritance if you take out an equity release loan in Sunderland.
This is because instead of leaving your loved ones your home as inheritance, your home will have to be sold in order to repay your equity release loan, as well as any interest on your loan.
If you were planning on leaving your loved ones inheritance but decide that equity release in Sunderland is the best option for you, then make sure that you talk to your children and next of kin about your plans so that they are well aware of your decision and do not feel like they are kept in the dark.
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The Equity Release Council also ensures that everyone who takes out an equity release loan has a lasting power of attorney in place.
A lasting power of attorney should be put in place when an individual no longer has the mental capacity to make their own decisions when it comes to things in life such as their finances, their health or their property [6].
When this happens, a lasting power of attorney will step in and make decisions of the individual on their behalf. They will deal with your solicitor and lender and will manage your health and your finances for you.
Lasting power of attorney is particularly important when it comes to equity release in Sunderland because equity release loans are supposed to last until you pass away or until you move into a care home for health reasons.
During this time, you might lose your capacity to make decisions.
This is why it is incredibly important to have this in place so that you have someone you trust in place to make decisions for you when you are no longer able to [6].
When choosing a lasting power of attorney, you should try to choose someone who you would trust with your life and your finances, and someone you have known for a very long time.
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If you have ever applied for a mortgage before, then you would have heard of a loan-to-value ratio.
With standard mortgages, it refers to the ratio difference between how much money you are able to put down as a deposit and how much you can borrow.
When it comes to equity release in Sunderland, the loan-to-value ratio means something slightly different.
The loan-to-value ratio in equity release refers to the amount that you are allowed to release from your property.
How much you will be allowed to release from your home depends on a number of different things, such as your age, your health status and the value of your home.
Most people are able to release around 20% – 60% of the value of their home, depending on your age and your health.
If you are worried about your loan-to-value ratio or are confused about how much equity you are able to release, then speak to a member of our team at Equity Release Warehouse for more information, help and support.
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Negative equity is when your house decreases in value so much that the value of your home is less than the amount left on the mortgage.
Negative equity can be incredibly devastating, as it means that you will not be able to sell your property for what you bought it for, leaving you in negative equity.
However, all equity release plans are protected by a no-negative equity guarantee.
This guarantee ensures that even if your home decreases in value so much that it no longer covers the loan amount when you come to sell, your lender will step in.
This protects you and your next of kin from falling into negative equity.
When applying for equity release in Sunderland, make sure to check the terms and conditions of your loan to ensure that it includes a no negative equity guarantee.
The Equity Release Council ensures that all equity release loans include a no negative equity guarantee as part of their terms and conditions.
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All equity release loans will need to go through an equity release solicitor before getting approved.
They will process your loan from start to finish and will take care of all of the conveyancing for you.
They will work closely with your equity release lender to work out how much you are able to release from your home and will look out for any scams or claws within your lenders terms and conditions.
As with any solicitor, you will have to apply a little bit of pressure on them in order to get your loan agreement through the door, especially if you have a limit or time pressure in any way.
It is important that you engage a solicitor as early on in the equity release as possible so that they can identify any scams or issues with your lender’s terms and conditions and contracts.
When choosing a solicitor to handle your equity release loan, you should always choose a solicitor from a large, well-known firm.
Your solicitor should have already dealt with an equity release case beforehand so that they know how it works.
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Choosing an equity release provider and lender isn’t always an easy decision to make, especially when there are so many different lenders to choose from.
All lenders will have different qualification criteria, meaning that just because you apply for one lender and get approved, you might not get approved for another.
Each lender also has their advantages as well as their disadvantages, which should be explained to you during the initial stages of your equity release loan application.
Your equity release specialist and adviser should talk through each lender with you and will also be able to check which lender you are likely to be approved for.
Below is a list of some of the most popular and commonly used equity release providers across Sunderland and the rest of the UK.
Again, your equity release solicitor and adviser will talk through each one as well as your options:
If you would like to know which equity release lenders you would qualify for and what their plans are like, then speak to a member of the Equity Release Warehouse team for help and support.
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The equity release industry has been around for decades, and more and more people are now turning to equity release as they get older.
The industry has become increasingly more regulated over recent years, which has improved consumer trust and faith.
It is thanks to a number of regulation services that equity release is what it is today.
For starters, the Equity Release Council has done significant work to increase regulation around the industry as well as improve the overall standard and quality within the industry.
All lenders and advisers are recommended to join the equity release industry so that they are working to the highest standards and always within the best interests of their clients.
Below is a list of the biggest regulators within the equity release industry:
If you want more information on these regulators or how they might affect the equity release industry, then take a look on their websites or talk to a member of the Equity Release Warehouse for more information.
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Yes, you are permitted to release equity from your home if you have an interest-only mortgage.
In fact, a lot of people choose to release equity from their home so that they can make the mandatory final loan repayment, which will need to be made in one large lump sum.
An interest-only mortgage allows homeowners the chance to only repay the interest on their mortgage each month, as long as they agree to pay off the loan itself by the time the mortgage term comes to an end.
In order to qualify for this type of loan in the first place, you have to provide evidence and proof that you are going to be able to make this final loan repayment in the form of one large lump sum.
Usually, this is done through inheritance.
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Whilst equity release is the perfect solution for a lot of people aged 55 or over, it might not be suited to everyone.
Some people might not be approved for an equity release loan, whereas others might not want to release equity from their homes.
This could be for a number of different reasons, including the amount of interest you are being charged or the fact that you might not be able to leave your loved ones as much inheritance as they want to by taking out an equity release loan.
For this reason, it is a good idea to consider some alternatives to equity release.
Downsizing your property is by far the best way of getting your hands on some extra cash.
By selling your home and buying a cheaper property, you will be able to cash the profit and difference, especially if your house has increased in value significantly and you downsize quite significantly.
You could do so by buying a much smaller property or buying a property in a cheaper area.
Whilst this might be difficult for those who simply do not want to move or are too old to move, it is an option you should explore if you think that equity release is not for you.
Likewise, if equity release in Sunderland is not for you, then you might want to consider taking out a personal loan, whether that is from a bank or from an individual such as a family member or friend.
Doing so should only be done if you have a good relationship with that individual and you aren’t in any other debt. Likewise, you could remortgage your property [7].
If you are too young for equity release in Sunderland or simply do not want to take out an equity release loan, then you might want to consider renting out a room inside your home to a lodger or family member.
By doing so, you will generate some additional income, which can help you to pay off your pre-existing mortgage or simply live a better lifestyle.
In search of additional income, you might want to also consider getting a retirement job.
This could be anything from continuing your old job, by just working part-time, or working part-time in a local shop, a local coffee shop or a local garden centre.
We all know that working can be stressful, which is why you should consider only getting a part-time job during your retirement and choosing a job that will not bring you much stress.
Budget planning is another incredibly responsible and reasonable alternative to taking out an equity release plan in Sunderland.
If you are considering doing so, then you are more than likely struggling for money and looking for ways of making your money stretch further and work for you.
Budget planning is a great way of ensuring that you do this.
Budget planning consists of a number of things such as creating a spreadsheet of your income and outgoings, looking into reducing any unnecessary outgoings, looking for additional streams of income and looking for any means-tested or council-funded grants or benefits that you might qualify for.
There are a number of online budgeting tools available online which are great at helping people to organise their income and outgoings in a productive way.
Not only will you be able to see exactly what your income and outgoings are, but you will also be able to assess whether all of your outgoings are necessary.
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If you are aged 55 or over and are in need of some extra cash during your retirement years, then taking out equity release in Sunderland might be the right option for you.
There are many benefits to equity release in Sunderland including the fact that the industry has become increasingly regulated over recent years.
However, if you are seriously considering taking out equity release in Sunderland, then you will need to acknowledge that there are risks associated to taking out an equity release loan, as there are with any other type of loan.
If you want to consider equity release in Sunderland, then make sure that you reach out to an equity release specialist and adviser, so that they can provide you with all of the information you need as well as inform you on the pros and cons of equity release.
It is important to remember that no equity release adviser will ever put any pressure on you to make a decision.
They are simply there to provide you with any information that you need to make an informed decision.
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If you are considering equity release in Sunderland, then talk to a member of the Equity Release Warehouse team for help and support.
Our team is on hand to provide you with any information you need to make a decision of your own.
We will even use our very own equity release calculator to work out exactly how much equity you are able to release from your home, taking into account your health, your age, the value and condition of your property as well as the type of property you are releasing equity from.
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[1] https://www.ageuk.org.uk/information-advice/money-legal/income-tax/equity-release/
[4] https://nationaldebtline.org/fact-sheet-library/equity-release-ew/
[5] https://www.moneysavingexpert.com/mortgages/equity-release/
[6] https://www.ageuk.org.uk/information-advice/money-legal/legal-issues/power-of-attorney/
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