Releasing equity in your home

18th June 2018

In the first quarter of 2018, nearly £10 million per day was drawn down in the form of equity release. That’s more than twice the volume seen just two years ago. And the increase is not simply down to people withdrawing more funds in respect of their properties; statistics reveal that the number of people taking advantage of equity release has also almost doubled in the same period [1]. In fact, in revealing these quarterly statistics, the Equity Release Council commented that they show “how equity release has become a more widespread financial choice among the over-55s as a way to use their property assets to help meet their financial needs.”

So what is equity release? Put simply, it is a way of accessing the equity from your home either to provide a lump sum or regular income, generally in retirement. Most schemes have a minimum age limit of fifty-five. There are two main types of equity release scheme available; lifetime mortgages and home reversion plans.

Lifetime mortgages enable you to take out a loan secured against your property. The loan is then repaid from property sale proceeds either when you die or move into long-term care. By contrast, with a home reversion plan you sell your home to the reversion company in exchange for the right to continue to live in your home either until you die or move into long-term care.

Why are equity release schemes increasing in popularity? To use a phrase which is much in use at the moment, these schemes could provide the answer for those who are asset rich and cash poor. In other words they can provide additional funds which enable people to stay in their homes; thereby avoiding the need to downsize.

However, equity release schemes should not be seen as a universal solution. Whilst they may prove to be the best option for some, others may find that it is not in their best long-term interests to move down the equity release route. For that reason it is important that those considering equity release take the advice of a qualified financial adviser who can help them to understand the options available and the implications of any decision. For example, taking equity out of the home and rolling up interest could have an impact on inheritance tax planning. Some individuals may also therefore want to discuss their equity release plans with their family before proceeding.  Equity release is a big step so be sure to get all of your equity release questions answered before making a decision.

Commenting on equity release schemes Thompson Jenner Financial Services Ltd specialist equity release adviser Philip Dalley said “equity release can prove to be a good solution for those who require additional funds in later life but it is important that current and future circumstances are taken into account and other avenues explored before making a final decision.” He added “As members of the Equity Release Council in Devon we are committed to abide by its code of conduct; ensuring that any advice we provide is fair and impartial and in the best interests of our clients.”



If you would like to find out more or meet to discuss the financial services which we are able to provide, please contact Philip Dalley at either our Exeter or Exmouth office on 01392 258553 or 01395 279521 to arrange a free initial meeting.



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