In This Article
How does equity release work?
Essentially, equity release enables you to access the money in your property without having to sell it. This can be done either as a lump sum or as smaller amounts paid out over time. Usually, the loan is only available to people over the age of 55, and it comes with a number of different interest rates such as fixed for life.
One of the main benefits of equity release is that the loan is typically tax-free. However, it’s important to note that taking out an equity release loan may affect eligibility for certain government benefits. For more information on how equity release might affect benefits, visit Entitledto.
What are the benefits of equity release in Milton Keynes?
For many people, equity release can be a solution to fund their retirement. With equity release, you can access the equity within your home without having to sell it.
This means you can continue living in your home while still being able to use the value of your property as you will have released money using the mortgage.
Equity release can also be a more flexible and affordable way to borrow money in retirement than taking out a traditional mortgage as you do not always have to make monthly payments.
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What is equity release?
If you’re over the age of 55, you can release funds from the value of your home without having to downsize to another property. Equity release schemes work in two ways: Life time mortgages and Home reversion plans.
With a lifetime mortgage, you borrow a lump sum of money against your home and don’t have to make any repayments until you move into long-term care or pass away. The amount you receive depends on the value of your home and how much equity you have in it.
With a home reversion plan, you give up ownership of some or all of your property for a tax-free lump sum or series of payments. In exchange for this payment or payments, the home reversion provider will offer you a lifetime tenancy, which allows you to reside in your home rent-free for the rest of your life.
Before taking out a home reversion plan, it is important to get professional advice to make sure that this is the right decision for you as the process is irreversible.
Equity release can also be used to purchase properties. For example, you may wish to move to a more suitable property and require a lifetime mortgage to be able to buy the property that’s most suitable.
How much can I borrow if I want to unlock the equity in my home?
It depends on various factors such as your age, circumstances, your property, the type of loan you want to take, and the amount of equity you are hoping to raise.
For example, the value of your property and your age are big influences on the maximum amount you can borrow. Also, your health and lifestyle can play a role, as some health conditions could enable you to borrow more.
Another factor to consider is your property itself. Is your home currently unencumbered? If you still have a mortgage, the maximum equity amount that you can apply for will be reduced by the amount of mortgage that you still have left to pay. Additionally, the type of property that you own and its present condition may also be factors.
What are the alternatives to equity release?
Downsize: One option could be to move to a smaller, lower valued property to release some funds. This may be a good choice if you have more space than you need, your children have grown up and moved out, or your current home requires a lot of maintenance.
Budget more: Another option is to review your expenses and see if you can make any cuts or changes to your budget. This may be a good choice if you are struggling financially and need to free up some extra cash.
Let out a spare room: The government’s Rent a Room Scheme allows homeowners to earn several thousand pounds tax-free by renting out a spare room in their property. SpareRoom may give you an idea of the rental income that you could attract
However, there are a number of responsibilities that you are obliged to meet as a landlord, so make sure you are aware of these before making a decision.
Get a part-time job: If you are retired, consider getting a part-time job to supplement your income. This could be a great way to bring in some extra cash.
The benefits of taking equity release in Milton Keynes
Some benefits of taking equity release are that you don’t have to make any monthly repayments, the mortgage gets paid off if you go into long-term care, you get a lump sum that isn’t taxed, and you still own your home. Additionally, with most regulated products you are guaranteed not to owe more than your home is worth, and you have the option to make monthly interest payments if you want to.
Downside to equity release
There are a few potential downsides to equity release that are worth taking into consideration. Firstly, if taking a home reversion plan, the amount you receive may be less than the full market value of your home, as the equity release provider will only offer a percentage of the overall value based on how much equity you have.
Secondly, if taking a lifetime mortgage and you don’t keep up with interest payments on the loan, it can roll over and start to eat into your equity.
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Can I sell my house if I have equity release?
If you have equity release, you may be able to sell your house. However, you may have to pay penalties. When considering equity release, be sure to factor this in. You may also be able to sell the property and take the mortgage with you to another property. As always, it’s best to get professional advice before making any decisions.
Do you have to pay monthly for equity release?
With the most popular form of equity release, a lifetime mortgage, you can choose whether to make monthly payments or let the loan balance roll up with interest retained. Some equity release plans do require monthly payments, however, so it depends on the product you choose.
Not all providers / products allow monthly payments so getting advice is crucial.
Your equity release adviser can help you choose a plan that fits your needs.
Can I get an equity release mortgage if I plan to rent out my house?
With most providers, renting out the house is against their terms but there are some equity release products that are designed for buy-to-let purposes, so you may be able to rent out your house if you have one of these mortgages. Alternatively you should be considering a buy to let mortgage.
I’m trying to get equity release, do I need to use a solicitor?
For most equity release lenders, you’ll need to use a solicitor who is on their panel in order to progress your application. It’s worth noting that most regular local solicitors will not be on the equity release lender’s panel, so you may have to look for a solicitor specifically experienced in equity release.
Why release equity in Milton Keynes?
When taking a mortgage on a new property or one you already own, having knowledge about the local area should be of importance. For anyone considering retiring in Milton Keynes using an equity release mortgage that doesn’t yet know much about the area, hopefully this info will help.
Milton Keynes has a population of approximately 223,000 people and is the larger settlement of the Borough of Milton Keynes, a unitary authority area with Borough status and located in the ceremonial county of Buckinghamshire.
It is located about 45 miles (72 km) north-west of London, and about 19 miles (31 km) north-east of the county town of Aylesbury. The town was formally designated as a new town on 23 January 1967,and was incorporated as a borough in December 1973. A large and modern conurbation, it has become one of the largest economic and automotive centres within the United Kingdom, including its first statistically self-designated urban area. Whilst the conurbation has been split into two divisions in addition to the traditional township names of the urban area, its economic success has translated into higher land values and a rapid increase in the size of Central Milton Keynes.
Milton Keynes is a vibrant and modern town with a great choice of shops, restaurants, bars and clubs. There is something for everyone, whether you enjoy a night out or a quiet evening in. The town also has a good selection of schools and is well connected to London and the rest of the UK by road and rail.
If you’re looking for extra money and you own your home outright or have a small mortgage, equity release may be a good option for you. With equity release, you can take the money you’ve freed up from your home as a lump sum or as regular payments. The money is tax-free and but may affect your benefits so this would need to be confirmed.
Before taking out equity release, it’s important that you understand how it works and the implications. An independent financial adviser can help you understand equity release and make sure that it’s the right choice for you. They will look at your financial circumstances and explain the different types of equity release.
If you’re interested in equity release, I NEED ADVICE can put you in touch with a qualified adviser. We’ll ask about your situation and make sure that you understand the process and the fees involved. We’ll also explain the standards set by the Equity Release Council.