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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
Struggling with living costs: Would equity release be sensible?
My husband has no pension (self-employed), and we are living on my small pension plus our state pensions. We are both 78. We own a three-bed semi in South East London where we have lived for over 40 years.
We haven’t had a holiday since we retired as we must be careful with the little income we have. Now, with rising inflation and increasing energy and petrol prices etc we are paying out so much more money and it’s getting to the stage where we are worried about paying the bills.
Do you think we might be eligible for equity release? Similar houses to ours in the area have gone for just over £500,000 recently. We are not sure what else we can do.
Answer
Thank you for your enquiry, and based on the information you have included, assuming you do not have an existing mortgage, the good news is you are likely to qualify for all equity release options.
If you have an existing mortgage, this will have to be repaid to allow you to raise capital, but this can be completed through the application process, and our independent equity release specialists will advise you how this process works.
Assuming, you do not have a mortgage, you can raise capital and I would strongly recommend a review of your circumstances with a whole of market equity release specialist to secure the best solution for your plans.
I note you refer to a little income, and you are right to be concerned about the rising cost of living. However, due to your income, you may be eligible for means tested benefits.
Therefore, during your discussions with one of our specialist equity release advisers, they will be able to provide you with a report detailing any benefit entitlement you may be able to claim. Once your ability to claim benefits has been established, our specialist advisers will recommend a plan that is tailored to your individual circumstances.
Flexible features of equity release plans include giving you access to an initial lump sum for your immediate objectives, and then creating a cash reserve fund to drawdown further capital in the future should you require more money to fund your retirement.
A drawdown scheme would suit your current circumstances if you were looking to take ad-hoc withdrawals whenever the time is right to support your standard of living and any extras such as holidays.
With a drawdown equity release scheme, you can make withdrawals from the cash reserve facility whenever you want and usually in as smaller amounts of £500 a time with some lenders. There is no extra admin fees or charges for doing this and can usually be completed with a couple of weeks.
Our advisers are here to help and guide you, and we offer telephone, video, or face-to-face advice, depending on your preference and without any cost or obligation. Should you decide to take a plan that our specialist adviser recommends, you would pay our fixed advice fee, and this is not payable until your application completes.
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Question
Will asbestos be a barrier to our equity release application?
My husband and I have been considering equity release as a way to renovate or very old ‘lean to’ at the back of our house into an extension with a downstairs bathroom and spare bedroom.
We know it has asbestos in the roof, however, and I read that an equity release lender might not be keen to lend on a property where there is evidence of asbestos. Please can you advise.
Answer
Thank you very much for your enquiry and I can confirm that equity release can certainly be used to complete the sort of renovation/extension work you are looking to fund.
As part of the application process a lender will require an independent survey/valuation to be completed on your home to ensure they are happy to lend, and depending on the estimated valuation of your home, it may be free of charge. Depending on the surveyors’ comments, the lender may then require a separate asbestos report to be completed, which would need to be paid for by yourself.
However, if you intend to remove the roof as part of the renovation an additional report would not be required. You are correct to assume that lenders are cautious regarding asbestos, especially if it is possible this may be disturbed during the planned works.
It would be wise to arrange quotations with a suitably qualified builder and investigate if any planning permission is required for the planned works, and whether you need a specialist, registered asbestos contractor.
I would suggest you talk to one of our equity release specialist advisers, who would be able to provide you with bespoke, whole of market advice without obligation. They will also be able to confirm if there are any costs involved for your valuation.
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Question
Reasons to refuse equity release
I wondered if there were any circumstances under which an applicant for equity release might be advised against using an equity release plan? I only ask because I am keen to apply for a plan, but I had a friend, a few years ago, whose adviser suggested downsizing would be a better option and would not approve her application. I know her home was being eyed up by developers at the time, which may have had an impact.
My circumstances are different. I am 67, live alone and my house is worth £670k. I don’t want to downsize as there are no suitable properties in my area. Thank you for your assistance.
Answer
Thank you for your enquiry, and I would like to begin by confirming that throughout my 20+ years of advising and then being the CEO of an equity release company, I understand that all customers have their own unique circumstances, and whole of market, specialist advice should be considered on every occasion.
Here at Equity Release Supermarket, our specialist advisers will discuss your current and future plans, and what key features you require for your individual circumstances. For example, Lifetime mortgages have evolved, and they provide a tax free-lump sum and/or a cash reserve facility.
Furthermore, they offer flexible features including downsizing protection and the option to make flexible payments with a fixed interest rate for life and fixed early repayment charges. Without knowing explicit details of your friends’ circumstances, it is not clear why the adviser would not make a recommendation.
However, I can assure you that our equity release specialist advisers will assess, and make a recommendation based on your unique circumstances. They will also provide you with a bespoke suitability report outlining your current situation, objectives, and key features of the plan recommended.
If the advice is not to continue with equity release, they will inform you why, and what alternative options they recommend. You can contact us here at Equity Release Supermarket via our freephone telephone number – 0800 802 1051, via our live chat facility, or you can leave your contact details on our website.
Our friendly advisers are waiting to hear from you, and you will not be charged for our advice until any application you accept completes.
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Question
I have a mortgage – can I release equity?
I own a three-bed terraced house in Kent, and I have about £30k remaining on my mortgage. I am currently three years into a five-year deal.
In the meantime, my son is due to get married next year, and he needs some money to help him and his fiancée to pay for the wedding. I’d also like to give them some money to help with a deposit for their own home and would like to release some equity from my own house to do so.
The house looks to be worth £320,000. I am aged 62. With all these factors in mind – and considering I am still paying a mortgage, can I release equity for my son and, if so, how much?
Answer
Thanks for getting in touch, and firstly I would like to offer my congratulations to your son, and I expect this will be a very proud day for you.
I can confirm that based on your age and the value of your home, you are eligible for equity release and a flexible Lifetime mortgage. However, before you consider remortgaging your home, and because you are three years into your current five-year mortgage, it would be worth discussing your plans with your current mortgage provider. This is because they may be able to offer you a further advance for your objectives and avoid any early repayment charges.
If you decide to take additional borrowing from your existing mortgage provider, your payments are likely to increase, and there are no guarantees that your application will be accepted.
An alternative to your current mortgage is a flexible lifetime mortgage and based on your age and property value you are eligible. As you have a £30,000 existing mortgage, this will have to be repaid, and this can be completed through the equity release application process, and our independent equity release specialists will advise you how this process works.
Flexible lifetime mortgages offer the unique feature of allowing you to decide if you want to make payments. A lender would provide you with a tax-free lump sum and as noted, you would have to pay off your existing mortgage and then raise additional capital.
Based on your age and property value, you could raise up to a maximum of £126,000 depending on your short-term objectives. If you do not need all of the capital immediately, you may be able to borrow an initial lump sum and then have a cash reserve for future capital requirements. Bear in mind – the higher the loan-to-value you borrow, the higher the interest rates become.
The lender would provide you with a fixed rate of interest for life and you decide if you want the interest to roll-up, or you can make monthly payments to service the interest and repay some of the capital or make ad hoc payments at your discretion.
I would suggest that you discuss your plans with one of our equity release specialists who are able to discuss your options in detail, and with your permission they could contact your existing mortgage provider to help you understand the options available to you.
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