We’ve put together some valuable information to help you make an informed choice and highlight things you’ll need to think about when considering equity release schemes and lifetime mortgages. Clifford Osborne Independent Financial Advisors offer expert advice on equity release schemes and much more across East Sussex and in Brighton, Eastbourne, Lewes, Seaford, Bexhill, Hastings, Newhaven, Crowborough, Uckfield, Tunbridge Wells and Hove.
We offer a free initial meeting on equity release schemes without obligation and all meetings are conducted face to face in the comfort of your own home. You are welcome to have friends and family members in attendance with you and we will be happy to answer any questions.
Consider all alternative solutions available
The decision to release equity from your home is a significant one and shouldn’t be taken lightly. By considering your equity release scheme options you may either eliminate your need to borrow, or reduce the amount you need to borrow.
Any reduction in the amount you release could significantly reduce the long-term cost of the plan and allow you access to better deals with greater flexibility.
The most common alternatives considered are:
- Downsizing, selling and moving to a cheaper property
- Borrowing from family or friends
- Utilising existing savings and investments
- Claiming all available welfare benefits, such as pension credit and attendance allowance
- Checking to see if home improvement grants may be available.
Only borrow what you need
Make a comprehensive list of your immediate and future potential spending plans. You don’t want to pay interest on money you don’t actually need.If you’re likely to need more money in the future flexible drawdown plans can provide access to additional funds when needed.
This means interest is only charged on the money you’ve actually borrowed. Borrowing money gradually can be far more cost effective than taking a single initial cash lump sum. On average it takes around 15 years for the debt to double and bear in mind your house value could potentially increase or decrease in value over the same period.
Think about paying the associated interest charges
If you can afford the payments, the most effective way of managing the cost of any release is to pay the interest on a monthly or annual basis. Many plan providers will allow you to manage the interest via monthly repayments or overpayments.
Even if the full interest payment is not affordable you can significantly reduce the cost by making partial repayments or overpayments as and when you are able.
Don’t judge an equity release scheme on interest rate alone
While a competitive interest rate is important, you should also consider how your plan will meet your future needs. Some of the questions to ask when choosing an equity release scheme include:
- Can the plan be repaid early and are there any early repayment charges?
- Can you borrow additional funds in the future and what costs would be involved?
- Can the plan be moved to another property?
- Who will own the property?
- Is the plan regulated by the Financial Conduct Authority?
- Does the plan meet the standards set by the Equity Release Council?
- What happens on the death of a borrower?
- What happens if we need to move into sheltered accommodation or a nursing home?
- On what circumstances are the early repayment charges waived?
- What are the set up costs and charges?
- How easy it is to access any reserve account and does this incur further costs?
- What, if anything, do I need to pay upfront?
A plan should meet your immediate and potential future needs and be flexible enough to adapt to change.
Involve family members or a trusted friend
We strongly recommend you discuss your plans with family. If you decide not to involve them, you may wish to let them know that any future inheritance will either be potentially reduced or in some cases eliminated.
If you don’t involve family members then we’d suggest discussing your plans with a trusted friend and we will as good practice ask your legal adviser to run through the illustration and key features documentation to ensure your understanding of the contract prior to completion under our vulnerable consumer policy.
It would also be advisable for you to inform the executors of your estate, as they may have to deal with the equity release provider when the house is sold.
Don’t proceed without specialist financial advice
Seek face to face advice from a qualified and experienced advisor who has access to all the plans and plan providers in the market. This will ensure that all available options are considered.
Clifford Osborne is a Financial Conduct Authority (FCA) Regulated Firm, authorised and qualified to provide Equity Release, Lifetime Mortgage and Home Reversion advice. We are also members of the Equity Release Council.
Get legal advice
All Equity Release Council-approved equity release providers require you to seek independent legal advice. Ensure your chosen solicitor has equity release experience and ideally agree a fixed legal fee before proceeding. We will be happy to recommend a specialist solicitor if required.
Don’t borrow money to invest
We strongly advise against you releasing funds to make new or top-up existing investments. It’s unlikely that any potential investment would provide a return greater than the costs associated with any borrowing.
Consider the impact any borrowing may have on your entitlement to means tested benefits
Having savings in the bank that you don’t need could affect your eligibility for benefits, now or in the future. Clifford Osborne will undertake a full benefits assessment to ensure you’re already in receipt of the maximum amounts available and to measure what impact any borrowing may have on your current and future entitlement.
Avoid paying for advice upfront
Our Equity Release service has been established to allow you access to expert advice from qualified advisors without initial cost or commitment. We offer equity release scheme advice to those based in East Sussex, Brighton, Eastbourne, Lewes, Seaford, Bexhill, Hastings, Newhaven, Crowborough, Uckfield, Tunbridge Wells and Hove.
To understand the features and risks of an Equity Release Scheme please ask for a personalised illustration. A typical fee for Equity Release is £795.00.
A Lifetime Mortgage and may reduce the value of your estate and may affect your entitlement to means tested State Benefits. To understand the features and risks please ask Clifford Osborne to provide a personalised illustration.