With more and more homeowners looking for ways to free up cash to support their later life plans, The Mortgage Service Scotland is on hand to help them consider their options.
In addition to traditional mortgages, Retirement Mortgages, Lifetime Mortgages, and Retirement Interest-Only Mortgages are available for those individuals who wish to borrow in later life.
What is equity release and how does it work?
To qualify for an Equity Release Mortgage, you need to be at least 55 years of age.
Depending on your age, you could release a tax-free cash sum of between 20% to 50% of the value of your house.
There are two ways of releasing the equity tied up in your home without having to move.
You can apply for a lifetime mortgage which allows you to borrow money against the value of your house or you can use Home Reversion Plan which allows you to release cash by selling part or all of your home.
Lifetime Mortgage
With a Lifetime Mortgage, you take out a loan secured on your property provided it is your main residence and you still retain ownership.
Having a Lifetime Mortgage, you can choose to make interest repayments or let the interest roll-up. The outstanding loan amount with any accrued interest is paid back when the property is sold if you die or move into long-term care.
If the lifetime mortgage is in joint names and one of you dies, the other will, of course, remain in the property.
Home Reversion Plan
A home reversion plan is a type of equity release scheme where part or all of your home is sold to provide either a tax-free lump sum or a regular income.
There is no interest to pay with a home reversion plan and you have the right to continue living in the property until they die or move into long term care, rent-free.
The house is sold when the last homeowner dies or goes into permanent care. The proceeds of the sale are split by the percentages originally agreed with the lender, with any money left being allocated to the homeowner’s estate.
How do you release equity from your property?
You can release equity from your property with either a Lifetime Mortgage or a Home Reversion Scheme.
Releasing equity from your home is a fairly straight forward procedure providing you receive advice from a reputable and qualified advisor.
What can you do with the money?
But when you’ve released the money that is tied up in your home it’s up to you to decide what to do with it.
Some people may choose to use the money to purchase a new car, a holiday or home improvements, with others choosing to use the money to help a family member purchase their first property.
As an alternative to releasing a single lump-sum payment, you can take the money on a regular basis to enhance your pensionable income.
Considering equity release?
Whether you are looking for ways to fund home improvements, boost your disposable income or help your family financially, releasing some of the equity in your property could be the key.
Releasing equity from your home is not a decision that should be taken lightly, they are high-risk products that reduce the value of your estate and may affect your entitlement to means-tested benefits and require specialist advice.
If you have access to cash through savings or investments, it may make sense to consider using these funds first.
Alternatively, depending on your circumstances conventional re-mortgaging or retirement interest-only mortgages could options worth considering.
The Mortgage Advice Service can arrange a free mortgage review with a qualified advisor who can help identify the best solution to suit your circumstances.
The Mortgage Advice Service does not advise or directly sell equity release schemes to our customers. We refer our clients to carefully selected qualified firms who can provide specialist advice on these products.
The Mortgage Advice Service does not charge our clients a fee for our referral service.
If you are interested in finding out more about releasing equity from your home contact:
The Mortgage Advice Service today on 0141 956 7756 or 0800 011 2322 and speak to one of our friendly and experienced mortgage advisors.