Equity Release Services

Due to the long term consequences of commencing an Equity Release Scheme, our services in relation to equity release are on a full advice basis only. If you require a full independent financial review, our qualified advisers are at hand to assist. We are happy to deal over the phone with the use of emails and/or snail mail. Home visits can be arranged subject to location or you can visit one of our offices. We stress this is not essential and appreciate that many people prefer to deal at arms length. We provide a research and recommendation service for these products which includes matching the correct scheme to your specific needs. There are now over 15 leading providers offering equity release schemes alone not to mention other companies offering interest only mortgages for the retired and Home Reversion Plans.

This area can be complex although with the use of our Equity Release services we can walk you through the process in a clear and professional manner. Initial enquiries are handled without charge. For further information use our standard enquiry form requesting this service.

An Introduction to Equity Release Schemes

If you are over 55, own your own property and are looking to tap into its value for a lump sum and/or regular income, an Equity Release scheme may be for you.

Due to the continuing rise in house prices, many individuals and couples in retirement are finding themselves living within a very valuable asset. The equity of the property can provide a very useful and secure source of capital that can be used for a range of purposes. These can include additional income, money for holidays or home improvements, money to protect your estate from the potential costs of nursing home fees and also alleviate inheritance tax to name but a few.

There are a number of schemes that enable you to tap into the value of your home without having to sell it and move out. The information on this website is not designed to be specific. Its aim is solely to help you to distinguish between the various plans available and to enable you to perhaps make some informed choices at this early stage. Once this decision has been made and you if you decide such a plan may be for you, you can then arrange a confidential fact finding appointment with one of our advisers without charge. This can be at your home subject to location, at one of our offices or over the phone.

Types of scheme available

Interest only mortgage

If you have surplus income and are looking simply for a lump sum, this may be an option. Subject to income there are now many lenders that will provide a mortgage into retirement and indeed, until death. During your life you simply pay interest to the lender and the original amount borrowed will remain stable. The interest rate may be fixed for a period if you wish. The primary advantage of this arrangement is that the debt will not increase during your life time and the lump sum can generally be used for any purpose such as gifts to children and grandchildren (useful for deposits for homes), holidays, home improvements or second homes. On death or when the property is sold the loan will be repaid. During your lifetime, should you move house, the loan can normally be transferred to the new property subject to it being suitable security.

Equity Release Mortgage

This is one of the most popular schemes that allows you to raise money either in the form of a lump sum, regular income or combination of the two. As long as you live in the property, you do not need to make repayments of any sort for life. You continue to own 100% of your property and the mortgage accrues interest throughout your life on the same basis as a secured loan as with any standard mortgage. Interest usually accrues at a fixed rate for the full term of the loan. On death or when the property no longer becomes your main residence, the loan is cleared with interest. For joint applications this applies to the second death. These are generally available when all applicants are over the age of 60.

Home Reversion Plan

Again generally available to the over 60’s, these schemes again allow you to raise money based on the value of your property. However, unlike the above schemes that allow you to retain 100% ownership, a proportion of your property is sold to the product provider. The advantage of this type of scheme is that your estate is guaranteed a proportion of the estate on death and there are no concerns regarding rolled up interest. On the other hand, you will be selling part of your property for a below market value and many find not owning their house, an unattractive option. Note that Home Reversion Schemes are not currently regulated by the Financial Services Authority.

Important Note

The above summaries are very brief and are designed to give you a feel for the options available. In each case please refer to the full product information that will be provided before commencing specific plans.

Safe Home Income Plan (SHIP)

In 1991 SHIP was launched to promote safe Equity Release schemes. Since then SHIP has enabled the Equity Release market to expand. Surveys carried out by member firms point out that over 98% of plan holders were happy with their plans. Safe Home Income Plans (SHIP) is dedicated to protecting the plan holders and promoting safe home income plans. Members have pledged to follow the SHIP code of practice. The majority of equity release schemes and products are SHIP compliant. A solicitor will oversee the Equity Release process on your behalf and they must sign to acknowledge that you are aware of the features and implications of your chosen plan. This is a further safeguard to you and no SHIP protected plan can go ahead without a signed certificate. Braunton IFA Ltd will only recommend Equity Release products that abide by the SHIP ethics.

Click here to download SHIP brochure

Tax & Benefits Considerations with Equity Release Schemes

Income Tax
With Equity Release schemes all monies advanced in the form of a lump sum or income are free from income tax. If you use the money released to generate an income, this could be taxable and affect your tax position.

Inheritance Tax
An Equity Release scheme can be used to reduce or mitigate the inheritance tax bill that the beneficiaries of your will may have to pay when you die. Specific advice is available if you wish to address the issue of Inheritance Tax in more detail.

State Benefits
If you are in receipt of state benefits it is possible these may be affected due to means testing of any state benefits you receive. If you are in receipt of such benefits we recommend you seek advice from the relevant office before releasing capital from your home.

Setting up costs

Below are the major costs you will need to consider when setting up a plan of this type.

Completion, arrangement and application fees
These are charged by the lender and are often £300-£600. These cover the lenders costs of setting up a Lifetime Mortgage and can often be added to the Lifetime Mortgage if required.

Valuation fee
Your property will need to be valued by the lender to make sure it provides the security required for the plan. The fee is based on the value of your property and could be between £200 and £500 depending upon the lender and value of the property.

Solicitors' fees
These are usually between £400 and £500 plus VAT and cover the cost of legal work carried out when setting up the plan. You should ask your solicitor for a breakdown of the fees.

Braunton IFA Ltd fees
Unlike many of our competitors, in the vast majority of cases we do not charge fees to clients for establishing Equity Release schemes. The fees we receive from the lender are normally sufficient to cover our costs. If your case does not proceed for any reason, no fee will be payable. Full details will be confirmed before your application is made.

If you would like one of our advisors to contact you to discuss Equity release schemes, please click here.