| Equity Release Schemes |
Making the decision to release some or all of the equity within your home is a very important one. The benefits of an equity release scheme also know as a sell and rent back scheme or a form of a remortgage can give a far greater quality of life having the funds tied up in your property available to you to spend as you wish or increase your current income.
Over the past 10 years equity equity release schemes have become very popular as many people have seen their homes more than double in value since the mid 90's. There are various equity release schemes from various companies available on the market. The key here is homework and finding the right equity release plan that suits your needs.
Below are a number of companies that offer equity release schemes which we recommend you research the benefits and possible pitfalls before considering entering into any agreement. Below are also further points and information on these schemes.
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How it works
An equity release scheme is that you receive the loan as cash, usually on a monthly basis, but sometimes as a lump sum, and continue to live in your home.
Then the company that loans you the money will recover it either by selling your property after your death or if you sell your property - for example to move into a care home.
Questions to ask
To be eligible for most schemes you should be aged 55-70, have a property that is worth at least £30-40,000, and ideally be a freeholder. If you meet these conditions, questions to ask before proceeding to invest in any scheme are:
Does the equity release schemes allow you to move house if you need to? One day you might want to move into sheltered housing or need residential care, or move to be nearer to your family.
What is your life expectancy? People in their 60s and 70s usually benefit most from monthly cash payments. If you are older you may receive less from this kind of plan before you die relative to the value of your home.
What are your family expecting to inherit on your death? The condition of most schemes is that they sell your home when you die. So if you use your property for home equity release you will not be able to leave it to your family, and will reduce the total value of your estate on your death.
Are you living with a younger partner, relative or friend? Depending on the terms of the scheme, they will need to find alternative housing in the event of your death.
What is your eligibility for means-tested benefits? The Minimum Income Guarantee is rising in value and the Pension Credit comes in this autumn. If you receive cash from a home equity release scheme this may cancel out your eligibility for means-tested benefits or help with paying for care.
Family feuds
You might also want to consider moving to a smaller, cheaper property
Home equity release schemes, like pensions, can be complicated. Age Concern recommends that you get independent legal and financial advice.
Wherever possible you should also discuss the investment with your family and anyone you live with. There is nothing like property inheritance for sparking off a feud.
And if money is really tight you may be better off finding out whether you qualify for means-tested benefits or other benefits such as Attendance Allowance or Council Tax Benefit.
You might also want to consider moving to a smaller, cheaper property. If you need the cash for repairs or adapting your property you might be able to get help from your council.
If you think home equity release is for you and want to find out more, Age Concern England offers an easy to read fact sheet 'Raising income or capital from your home' free of charge from our Info Line 0800 00 99 66 open 7am-7pm, seven days a week.
equity release schemes
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