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Mark Gregory, Founder and CEO at Equity Release Supermarket
www.equityreleasesupermarket.com
Tel: 0800 802 1051
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Question
How do I get advice on my equity release application?
My husband I would like to release equity from our home to modernise our kitchen and bathroom. Apparently, we need to get advice first.
We don’t have a financial adviser and all those I’ve looked up don’t seem to cover equity release. Can you help please?
Answer
Your objectives of releasing capital from the equity in your home to pay for home improvements is one of the most popular reasons customers use equity release, so you are not alone.
Equity Release has changed considerably over the last 20 years as providers have added many flexible, beneficial features, and ensuring that a plan contains the right options for you is what an expert equity release adviser will do.
Here at Equity Release Supermarket, our advisers are fully qualified, and they are members of the Equity Release Council who represent the equity release industry, promoting high standards of conduct and advice with consumer safeguards at its heart.
Equity release is regulated by the Financial Conduct Authority (FCA), and it is an advised product which means that you must take advice.
Our friendly, professional advisers can offer you face-to-face, telephone, or video conferencing, so the choice of how you take advice is your decision. Here at Equity Release Supermarket, we will provide you with whole of market advice as we are not tied to one or a small number of providers, so you can be assured of the best plan to match your circumstances.
We do not charge for a friendly discussion, and furthermore, if you do decide to go ahead with a recommended solution, you will not pay for the advice until your application is complete, so you have nothing to lose in chatting through your circumstances with one of our friendly, professional advisers.
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Question
What’s the minimum amount an equity release customer can borrow?
My parents would like to take out a small sum of equity from their home to pay off my brother’s credit card debt – it’s a bit of a fiasco, but ultimately my parents have agreed to bail him out.
Their house is worth £850k and they own this outright. My mum is 78 and my dad is 76. They would like to release £25,000 – is this amount accessible?
We were wondering if, like a mortgage, there was a minimum sum?
This is not an easy decision for my parents, and they are not keen to release too much as they are worried about the inheritance implications. Indeed, they have three children and nine grandchildren.
Thanks for your advice.
Answer
Thank you for your question, and I can understand that your parents want to help your brother and they also want to protect their other beneficiaries.
To answer your question, I can confirm that the minimum initial release from a flexible lifetime mortgage is £10,000, so based on their age and property value, your parents are likely to be able to raise the capital they need to help your brother.
However, assuming your parents do not have a mortgage or secured loan, they are eligible for all later life lending including a Home Reversion Plan, a Retirement Interest Only Mortgage, and a Lifetime Mortgage.
A Home Reversion plan involves selling a share of the property in return for a cash lump sum, and a Retirement Interest Only mortgage allows a customer to raise a lump sum and then make monthly interest payments until the loan is repaid.
A Lifetime mortgage would give your parents choices because they could raise the capital they need, and they can decide if they would like to make monthly payments to service the interest and if they want to repay some of the capital.
Alternatively, they do not have to make any payments, or they can just make adhoc payments, so they have lots of choices.
Gifting capital via a flexible Lifetime mortgage to loved ones at a time when they most need help is a popular choice for customers; however, it is vitally important that all family members support their parents plans to ensure that there are no surprises in the future.
One of our expert advisers will discuss your parents’ options in detail before making a bespoke recommendation. Our adviser will discuss the features that your parents may find attractive including flexible payments, and an inheritance protection guarantee.
Furthermore, depending on your brothers circumstances they will explain how he could make a payment to cover the interest, and how much a payment would be.
Another consideration is that your parents could note the gift in their Will as this would ensure the estate would be shared according to their wishes taking into account the gift to only one sibling.
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Question
Can you provide a recommendation?
I am keen to look into the lifetime mortgage market as I feel my pension needs topping up. My friend recommended Pure Retirement as they provided her equity release plan with great success.
Are they recommended by advisers, and should I also get quotes from elsewhere before proceeding? Which other providers are recommended in this space?
Answer
I am pleased to learn that your friend is happy, and they are able to recommend Pure Retirement, as they are one of many reputable companies who provide Lifetime mortgages, and other providers include Aviva, Legal & General and Canada Life.
Here at Equity Release Supermarket, we have expert, fully independent whole of market advisers, not tied to one company or limited to a panel, and because we give whole of market advice with no allegiance to any provider, you do not need to go anywhere else for sound advice.
One of our expert advisers will help you by assessing your circumstances, and then they will make a recommendation based on your objectives.
One of the many flexible features at your disposal include borrowing an initial lump sum and then drawing down regular capital to supplement your retirement income.
Our advisers will explain in detail why they have recommended the plan and the provider but rest assured that all providers are fully regulated by the Financial Conduct Authority (FCA) and members of the Equity Release Council, so you have peace of mind, and you too will have a reputable provider who you can confidently recommend in the future.
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Question
What’s a RIO and is it suitable?
I have an interest-only mortgage which I kept meaning to switch from but have never got around to.
I am planning to retire in a couple of years and someone mentioned I could switch this over to a Retirement Interest Only Mortgage – RIO.
Is this correct and what are the benefits? I am 58 and planning to retire at 60.
Answer
A Retirement Interest Only Mortgage (RIO) is available to homeowners who are aged at least 50, so you are eligible based on your age.
As somebody who is experienced with an interest-only mortgage, you will be aware that the capital balance remains level and you are contracted to make monthly payments.
The main difference with an interest-only mortgage and a RIO mortgage is the RIO will provide you with capital for the rest of your life and is designed to be repaid when you have passed away or need long-term care.
Furthermore, the amount you can borrow with an interest-only mortgage is based on your income when you are working; however, a RIO is based on your retirement income to ensure that the payments are affordable for the rest of your life.
The benefits of a RIO include the option to have a discounted interest rate or a fixed interest rate for a specified term, or alternatively, you can have a fixed interest rate for the rest of your life so you will know exactly how much you will have to pay each month.
Some RIO mortgages allow you to make flexible ad hoc payments to repay some of the capital if you are able to do so. A RIO mortgage will demand a monthly payment, so this will give you the reassurance that your capital balance will remain the same.
Alternatively, as you are planning to retire in a couple of years, you may want some flexibility with your payments, so you may wish to consider a Lifetime mortgage because with this plan you are not committed to payments, or you can make payments, and then stop, pause, or restart them anytime in the future without penalty.
A lifetime mortgage is not dependant on your income; however, if you do not make payments to service the interest to a Lifetime mortgage, the loan will compound and increase throughout your lifetime.
Here at Equity Release Supermarket, one of our expert advisers can provide you with advice on all of your options without obligation. They can inform you how much you can borrow from a RIO by arranging for you to receive a decision in principle, and they will also explain RIO and Lifetime mortgages in detail, to ensure they give you the best advice for your circumstances.
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