Equity release
Many older, retired people find themselves living in a property
worth a considerable amount of money, but have difficulty living comfortably,
due to lack of income. An Equity Release Plan can help solve this
problem, by releasing equity in the property through either a Lifetime
Mortgage or a Home Reversion Plan. The Equity Release company would
then provide the occupant(s) with a lump sum or income or a mixture
of both. Equity release products involve borrowing against or selling
all or part of your home. There may be more suitable methods of raising
the funds you need.
With a Lifetime Mortgage, the interest on the loan can either be paid
to the lender monthly or allowed to roll up. With a Home Reversion
Plan, the borrower makes no repayments and the interest on the loan
will roll up. In both cases, if the interest on the loan is rolled
up, this will continue until the borrower dies or moves into Long
Term Care/Sheltered Accommodation when the house is sold. In these
circumstances, the borrower must be aware that this will reduce the
remaining equity in their home. If the borrower lives a long time
or house prices fall, there may be no equity left for their heirs
to inherit.
Because
of problems encountered in the early 1990's, when interest rates were
very high, safeguards have generally been put in place, to ensure
that the occupants would be secure in the property for their lifetimes.
Most companies qualify for the Kitemark SHIP, which means Safe Home
Income Plans: if Equity Release is to be considered, it is important
to ensure that the company involved qualifies under the SHIP requirements.
Obviously, Equity Release should not be entered into lightly and all
members of the family, especially offspring, should be consulted.
Additionally, it would be important to ensure the right scheme is
selected, so independent financial and legal advice should be sought.
Equity
Release Plans may work out more expensive in the long term than downsizing
to a smaller property.
Releasing equity from your home may affect your entitlement to state
benefits and grants.
This is a lifetime mortgage. Equity release refers to Home Reversion
Plans and Lifetime mortgages. To understand the features and risks
ask for a personalised illustration.
MJR Financial Services are not authorised to advise on Lifetime Mortgages,
but we can put you in touch with Sesame Solutions, who would be able
to advise you appropriately.
Fees:
Option 1: commission split
* Client
pays £450 advice fee upfront
* 50% commission retained by Sesame Solutions
* 50% commission paid to introducing adviser
Option 2: fee option
* Client pays for advice by fee
* 1.25% of total amount released (subject to a minimum of £1450) payable on application
* £450 retained by Sesame Solutions with the balance split 50/50 between Sesame Solutions and introducing adviser
* Commisson refunded to client
