What Is Equity Release For?
Wondering what Equity Release can be used for? Pretty much anything! Here are some examples of what our clients use Equity Release for.
Repay an Existing Mortgage
Our clients had recently received a letter from the bank stating that their interest only mortgage was shortly due for repayment as they were coming near to the end of the term.
The clients contacted their bank to see what options they had, however, having spoken to the bank, unfortunately, due to a tightening in the banks lending criteria they were told that they would not be eligible for a new mortgage or to extend the term as their income was not sufficient.
The clients then contacted us and we were able to arrange a Lifetime Mortgage for them to repay their existing mortgage which enabled them to continue living in their property for the rest of their lives.
The mortgage had the added bonus of having a fixed rate for life which meant they would not need to re-mortgage again in the future and no requirement to repay the mortgage until the second person had either passed away or entered long term care.
Gift to Children or Family
This is becoming increasingly popular for parents (or grandparents) to help children or grand children by releasing a lump sum to gift to them to help with either a deposit for their first home (or subsequent home) or to help with income if unfortunately, due to challenging employment markets their income stops or reduces.
Equity can be released to repay any debt that you wish to, as long as any secured loans or mortgages are repaid at the same time. If the property is mortgage free then a lump sum can be released to repay debts and free up income to use for more enjoyable reasons!
Many clients do not realise you can use a Lifetime Mortgage to move home. As with traditional mortgages, you can take out a lifetime mortgage to cover the shortfall to enable you to move home, whether that be to downsize, upsize, or to move closer to family.
Remortgage an Existing Lifetime Mortgage
Many historic Lifetime Mortgage plans are potentially sat on high interest rates with inflexible terms and conditions compared to the modern Lifetime Mortgage plans.
We had a client that had arranged an historic Lifetime Mortgage with a well-known company who was stuck on a high rate of interest. We visited the client and analysed the plan they were on and although they had to pay an early repayment charge to leave their existing provider, we ended up moving the plan to a much more flexible arrangement at a lower rate of interest saving the client over £200,000 in interest charges over the next 15 years.
Equity can be released to provide a lump sum for home improvements or alterations if your mobility is starting to become impaired. Typical examples would be garden landscaping, downstairs wet rooms, extensions, new kitchens and bathrooms, conservatories and much more.
Holidays, a New Car, or Both!
Equity can be released for pretty much anything that is legal!
If you need additional income on a monthly, quarterly or annual basis then Equity Release can be used to provide you with further income to help with any financial shortfalls you or your family may have.