Equity Release

Equity Release is the generic term given to all forms of financial plan which generate cash lump sums or income from one's property. The two main types are Lifetime Mortgages and Reversion Plans and they are regulated by the Financial Services Authority.

Any such plan is of great financial significance to the home-owner. At Honister Partners, only those advisers who are specially licensed may give advice in this area. The products we recommend are approved by SHIP (Safe Home Income Plans). This is an organisation who set industry-wide standards and codes of conduct for these types of scheme.

If you are interested in Equity Release we consider it essential you receive advice from an independent financial adviser. Please contact us using the details on this site.

These are lifetime mortgages and home reversion plans. To understand their features and risks, ask for a personalised illustration.

How does Equity Release work?

There are two main types of plan, Reversion Plans and Lifetime Mortgage Plans. Both types typically give a guarantee that you may continue to live in your home for the rest of your life, or until you leave your home permanently to go into care.

A Reversion Plan involves the sale of part or all of your property to the reversion company in exchange for a lump sum. Most plans require you to be at least 65 years of age (some reversion plans require you to be aged over 70).

A Lifetime Mortgage Plan is a loan, secured on the property. You may take the loan by way of a lump sum, a regular income, or a combination of the two. The amount you can borrow depends on your age: the older you are the more you can borrow. You make no repayments until after death or quitting the property permanently e.g. to enter long term care. In almost all cases the lender issues a "no negative equity" guarantee, which means whatever happens, you / your estate can never owe more than the value of the property.

It is important to remember that Equity Release plans may be used to generate regular (e.g. monthly) income as well as lump sums. However, not all lenders offer this income facility. Note: It is important to consider the effect of an equity release plan, and the funds accessed thereby, on any State benefits to which you may be entitled. This is particularly important if such benefits are means tested, so it is vital to seek professional advice from a qualified adviser. For example, there may be other State benefits you may be entitled to claim, which might mean that an equity release plan is not suitable for you.

Why do people consider Equity Release?
 - Provide additional income
 - Raise capital
 - Holiday home purchase
 - Reduce IHT (inheritance tax)
 - Fund long term care
 - Provide lifetime gifts to relatives, for example giving a grandchild a help onto the property ladder.
 - Pay for a dream holiday
 - Purchase luxury goods or anything else - there is no restriction on how you use the funds.

Finally it is most important that you discuss the idea of equity release with your family, especially if you are thinking of leaving an inheritance behind when you eventually die. One of the drawbacks of using a Lifetime Mortgage plan is that over time the accumulated interest will reduce the value of your estate when the property is eventually sold. This can significantly reduce the amount of money you end up leaving to your family.

We always recommend independent advice on this important financial issue. Call 0845 013 6525 for an initial chat with one of our specialists - it will cost you nothing and will hopefully explain all of your options.

If you wish to proceed further, there will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £500.