Advanced Mortgage Services Ltd
We provide Independent Advice from the Whole Market
Equity Release Risk Warning.
Lifetime mortgage, or home reversion plan.
Equity release may affect your entitlement to state benefits and could reduce the value of your estate. To understand the features and risks, ask for a personalised illustration.
Please think carefully before securing other debts against your home.
Whilst equity release can provide priceless benefits for many in retirement, it is not suitable for everyone. In some cases there can be drawbacks which outweigh the benefits. Obtaining independent advice from a specialist equity release adviser is crucial if you are to make a decision on the right scheme and avoid making a mistake.
When considering Equity Release you should remember that you will be securing a loan against your property or selling all or part of your home.This could work out to be expensive over the long term and other options should also be considered.
Downsizing or renting
It may be possible for you to sell your property and move to a smaller less expensive property and release some of the value in the property. You will need to consider the associated sale costs involved in this transaction as they can run into many thousands.
Selling or renting could also be an answer but again long term rental costs could be high and you are unlikely to have the security of your own home.
Do I Qualify For Equity Release?
Normally if you are over 55 yrs old and your property is worth over £70,000 you should be eligible for an equity release plan. Some factors such as the type of property maybe restricted if it is non standard construction, short term lease, or restricted use such as retirement properties. This should also be considered if you intend to move property in the future and need to move the Equity Release to the new property. It should also be remembered that future availability of Equity Release funds is not guaranteed.
Part of our research into the appropriate product will be to try and minimise the costs in the short, medium and long term. This will include such items as valuation fees, arrangement fees, interest rate charges and solicitors fees. These fees with the exception of solicitors fees will be detailed on a personalised key features illustration, which you will receive before any application costs are incurred. Please follow this link What Does it Cost for more details.
You could be entitled to state benefits such as pension credits, or reduced council tax payments. You may also be eligible from the local authority housing grant for home improvements or modernisation. Some means tested benefits could be effected by an Equity Release as this could increase the savings you have and the income you receive. We would discuss this in detail and assess your entitlement with you. Please see Contacts for further information page if you think you might be entitled to pension credits, grants or reductions in council tax.
How will this effect my family
Many of those taking out equity release schemes are elderly and can benefit from having a younger relative to guide them through the process. Children in particular need to understand why their parents are considering equity release. After all it can be expensive, isn’t risk free and could mean less of an inheritance for them. One or both parents may start to loose their mental strength as they get older. It would be advisable then to have a younger relative who also has power of attorney to help out in this situation so it is important for them to know what has been arranged.
It should be remembered that if you take money from your property and spend it there will be less left in your estate to pass on to your beneficiaries. You need to be aware of the likely impact of compound interest associated with a Lifetime Mortgage or the reduction in ownership involved with a Home Reversion Plan before you consider either option. This will likely effect your children/beneficiaries as well so while it is not a compulsory requirement to obtaining an equity release we still strongly recommended you discuss this with them and possibly be in attendance at any meetings.
Use Savings or investments
If you have savings or investments you should consider using these first before an equity release. You may need to speak to an independent financial adviser regarding this as your investments may be tied up or in tax free investments. Also your inheritance tax position may effect your situation so further tax advice from an accountant or tax adviser may be required.
Can I gift my children money released to reduce the inheritance tax on my estate.
The simple answer is yes you can but you should consider this carefully as it may take 7 years to be fully outside your estate and this is also subject to changes in future tax rules. It can be considered also if you want to help your children to purchase their own home especially if they are grown up and still living in your home.
Many people in retirement are now struggling to make their income stretch to meet all the bills This situation is likely to continue with low rates of returns from savings and pensions but there are a number of things that could be looked at.
The first step is to establish your income and expenditure and then determine if there is any way you could increase your income, possibly by way of tax credits, council tax reductions, grants or working part time. Please click on contacts for further information regarding possible allowances available. You may be able to cut costs by looking at all your outgoings and the researching if any can be stopped or reduced. Today the best deals for utilities, gas, electricity, insurance and telephone are obtained by going onto the Internet and looking at comparison sites. If you are not proficient at this ask your children or someone who has computer knowledge to help you. We have a budget planner which many people have used and found helpful. Budget Planner.
What if I have an existing mortgage
If you have a mortgage on your property it may still be possible to arrange an equity release but a number of factors will need to be taken into account. All equity release companies will need the existing mortgage to be repaid as they will require the first charge over the property. The funds released by the equity release can be used to repay the existing mortgage, subject to there being sufficient equity in the property, but it should be remembered that the total cost to the estate will likely be higher.
To understand how this could affect you it would be advisable to speak to an equity release adviser before making any decisions.
Having considered the alternatives, the next question is ‘have you gathered sufficient information to enable you to make an informed decision that you and your family, are happy with?’ This may take some time to answer and you should delay any decision and ask more questions if you are not happy to proceed.
Your home is at risk of repossession if you do not keep up repayments on a mortgage or any other loans secured on it and you should think carefully before securing any debts on your home
Advanced Mortgage Services Ltd is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Advanced Mortgage Services is registered in England. Company registration number 4751565.
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