- Alcester Office +44 (0)1789 765522
- Bedford Office +44 (0)1234 400000
- Cardiff Office +44 (0)2920 291 704
- Evesham Office +44 (0)1386 425300
- Hindley Office +44 (0)1942 257930
- Leicester Office +44 (0)116 255 9911
- Leigh Office +44 (0)1942 673311
- Lichfield Office +44 (0)1543 414426
- London Office +44 (0)20 7293 0998
- Luton Office +44 (0)1582 720175
- Northampton Office +44 (0)1604 233 200
- Redditch Office +44 (0)1527 406363
- Solihull Office +44 (0)121 705 2255
- Stopsley Office +44 (0)1582 453 366
- Stratford-upon-Avon Office +44 (0)1789 270 452
- Sutton Coldfield Office +44 (0)121 355 6118
- Tunbridge Wells Office +44 (0)844 556 3525
- Walkden Office +44 (0)161 790 1411
- Walsall Office +44 (0)1922 720000
- Walsall Office - Crime Dept +44 (0)1922 647 797
- Warrington Office +44 (0)1925 632267
- Westhoughton Office +44 (0)1942 816515
- Whitefield Office +44 (0)161 796 7920
- Wigan Office +44 (0)1942 244294
Unlocking Your Equity - the Choices
There is a bewildering variety of equity release schemes on the market and, judging by the letters pages of the financial press, they are not well understood. Releasing equity in a house can be an effective way of supplementing your income or releasing spare capital that will not be needed for your children. Each type of scheme has its advantages and disadvantages and choosing the most appropriate one (or indeed, deciding whether to set up such an arrangement in the first place) should only be done after considering the options carefully and taking professional advice.
Here is a brief summary of the main types of scheme being offered:
Home Income Plans
This is really a fancy title for a mortgage-based annuity. The principle is that a mortgage is taken on the property and the lump sum is used to buy an annuity or invested to provide an income which is used in part to pay the interest on the mortgage. The mortgage reduces the value of your estate for Inheritance Tax purposes. However, for most purchasers of these schemes the net increase in income is rather low, as most of the income generated goes to paying the additional mortgage interest.
With these plans, a lump sum is withdrawn and the interest payable on it 'rolls up' during the rest of your lifetime. The amount to be repaid will be an unpredictable proportion of the total value of the house and will depend on both the future movement in house prices and the prevailing interest rates (unless fixed at the outset). Because of the risk involved, Roll-up Plans are seldom used to advance more than half of the equity value in a house. Some schemes permit the maximum liability under the roll-up to be limited by reference to a percentage of the ultimate value of the house. The big plus point is that there are no repayments during your lifetime.
Home Reversion Plans
Under these schemes, your house is sold to the lender at a discount to current market value and you are then given the right to remain in the house for life. These schemes can be set up so that a fixed proportion of the value of the house is sold, not 100 per cent. There are no capital or interest payments.