Paying off a mortgage is for most of us a lifetime achievement rewarded with the satisfaction of owning our own home outright. Unfortunately for many of us this achievement comes at a point when we are nearing the end of our working life and having to look forward to managing our income on a pension. We are all aware of the concerns relating to pension plans and the fact that many of us are going to have to work longer to get less on our pension and inevitably face a reduction in our spending power. Equity release is often presented as a way of releasing money that is tied up in the capital of our homes to help make our retirement that much more enjoyable. You should always take legal advice before entering into such arrangements as there are many packages available and consequently many potential pitfalls that a good legal advisor can advise you upon
You can continue to live in your home and use the money to get more from your retirement. Whether it's to top up your income, make home improvements, buy a new car or even take a special holiday - it's up to you how you spend it.
Taking a lump sum, plus the costs, will reduce the value you have in your home, and therefore the amount of any inheritance you leave. Your tax position and any entitlement to welfare benefits may also be affected. All of these matters are something that our specialist legal team can advise you upon.
There are 3 common plans:
Interest only Mortgage.
You borrow a sum of money secured on your home by way of a mortgage and repay interest each month to the lender. The capital is repaid when your home is sold and remains roughly the amount borrowed however long you have the mortgage.
Lifetime Mortgage
You borrow a sum of money secured on your home by way of a mortgage but you make no repayments to the lender. The interest rolls up and the sum borrowed plus all the accrued interest is repaid when your home is sold. This will reduce, severely, or cancel out any equity you have in your home
Home Reversion
You sell your home to the lender for a percentage of the full market value. Again you make no repayments to the lender but they own your home subject to the right for you to live in it until you die or have to go into care when the lender will sell it. With rare exceptions, they will keep all the sale proceeds.
Whichever plan you choose, it is advisable that you seek independent legal advice and we are able to provide that to you."
