In This Article
How does equity release work?
If you’re over 55, equity release mortgages enable you to access the value of your property without selling it, either as a lump sum or as smaller amounts paid out over time. The loan is typically tax-free, but it may affect your eligibility for certain government benefits. For more information, visit Entitledto.
What are the benefits of releasing equity from your home?
For many people, releasing equity from their home can be a great way to fund their retirement. With equity release, you can access the value of your home without having to sell it.
This means you can continue living in your home whilst raising money from the property to live on. Equity release can also be a more affordable way to borrow money in retirement than taking out a traditional mortgage as you don’t always have to make monthly payments. Read more about Mortgages Into Retirement.
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What is equity release?
Equity release is a way for people over the age of 55 to access the funds in their home without having to downsize. There are two types of equity release schemes: lifetime 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 you will be signing over the ownership of your home so not a small decision to make.
You can find more information on Equity Release here. Please also read Mortgages For Over 50s.
What are the restrictions on how much I can 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, your age and the value of your property 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 some alternatives to equity release in Winchester?
Downsizing to a smaller home
Moving to a smaller house could be an opportunity to release some equity. 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, selling and moving to a smaller home could be a viable option.
Budgeting more carefully
Reviewing your expenses and making cuts where necessary could be a way to free up some extra cash.
Renting out a spare room
Taking in a lodger and renting out a room in your house could be a way to earn some extra money. 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.
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.
SpareRoom may be a useful website for you to use when working out what rental income a room may attract.
Getting a part-time job
If you are retired, another option could be to get a part-time job to supplement your income.
The benefits of taking equity release
There are several benefits to taking equity release, such as not having to make any monthly repayments, the mortgage getting paid off if you go into long-term care, receiving a lump sum that isn’t taxed, and still owning your home. With most regulated products, you are guaranteed not to owe more than your home is worth, and with some products you have the option to make monthly interest payments, if you choose to.
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Downside to equity release in Winchester
When selling using a home reversion scheme, it may not provide the full market value of your home and the provider will only offer a percentage of the overall value based on the equity you have. Also, if you don’t keep up with interest payments on the loan, it can roll over and start to eat into your equity.
For lifetime mortgage products, if you choose not to make monthly interest payments, the loan will begin to roll up by way of compound interest. Over time, this will eat away at the equity in your property.
Can I sell my house if I have equity release?
If you have equity release, you may be able to sell your house, although you may have to pay penalties. Equity release should be taken into account when you are considering selling your house. You might also be able to sell the property and take the mortgage with you to another property. Always seek professional advice before making decisions about your property.
What are the payment options 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. 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?
Some equity release products are available for buy to let purposes, so you may be able to rent out your house if you have one of these mortgages.
In order to get equity release, do I need to use a solicitor from the lender’s panel?
Most equity release lenders will require you to use a solicitor from 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 Winchester?
When choosing to retire in a location and take an equity release mortgage, knowing what’s around and the history of the place is important. For anybody with a limited amount of knowledge of Winchester, hopefully the below information will be useful.
Winchester is an attractive city steeped in history, with Winchester Cathedral at its core. The city has a large number of medieval buildings and plenty of cobbled streets to explore. The High Street is home to many high-end shops and restaurants, while the Great Hall is a magnificent building which dates back to the 12th century. Winchester is a great base for exploring the surrounding countryside, with the South Downs National Park only a short drive away.
The city is home to a number of different attractions including Winchester Cathedral, the Great Hall of Winchester Castle, and the Winchester College.
The city provides a number of different shopping and dining options.
Winchester is located close to a number of different transport links including London Heathrow Airport and Southampton Airport.
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Conclusion
If you own your home outright or have a small mortgage, you may be able to get money from equity release. 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 doesn’t always affect your benefits (although you need to take advice on this)
Before taking out equity release, it’s important to understand how it works and what the implications are. 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.
Please make sure you only take advice from advisers that are regulated by the Financial Conduct Authority and showing on the FCA register.
If you’re interested in equity release, I NEED ADVICE can put you in touch with a qualified adviser.
They will ask about your situation and make sure that you understand the process and the fees involved. They will also work within the standards set by the Equity Release Council.
They are experienced, which can boost your chances of being approved.
