7 Things to Consider when Releasing Equity from Your Home

7 Things to Consider when Releasing Equity from Your Home

Consider these 7 things before Releasing Equity from Your Home


1. Understanding equity release

This sort of goes without saying, but it’s vital you educate yourself on what equity release is. It comes into the main forms of home reversion and a lifetime mortgage. Both have their pros and cons, which is something to consider when taking equity out of a property.

2. Protect your inheritance

If you are wanting to leave a portion of your property to your children or grandchildren, equity release plans have options that you can protect your assets, to ensure your finances will be taken care of after you have passed away, go into care or the house is to be sold.

3. Involving your family

This isn’t essentially a necessity, but it is recommended. If you are leaving your estate to your loved ones or they are involved in the beneficiary process, it may be a good idea to bring them along to a meeting with your financial advisor. They can then understand what is expected of them after you are no longer in control of the property and they are taking ownership.

4. Considering all your options

After you’ve educated yourself, you may discover that equity release isn’t quite right for you. However, there certainly are other options available. Speak to your financial advisor about the other possibilities such as using investments, savings, other financial borrowing or downsizing, to name a few.

5. Interest options: to pay or not to pay?

On a lifetime mortgage, you have the option to start paying your interest back or can have it totalled up at the end. If you start paying it sooner rather than later, it will cost you less, for a start. If you were to pay no interest throughout, the final sum may not be as affordable. It’s always best to discuss this option with your advisor to see what you can and can’t afford.

6. Find out your value

The equity taken out of your house isn’t just based on your property value. You as an individual will also be valued depending on your age, health, lifestyle and then also the value of your current home. You can find out the value of your home using online calculators or by speaking to your financial advisor about what you need to borrow.

7. The future

You may decide that you will want to move in several years or even go abroad. This is something to consider as early repayment fees are high on lifetime mortgages and with home reversion plans you will be expected to buy back your share in your home at full market value. Your financial advisor can answer any further questions or queries you may have.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone.  This is a referral service.