Is equity release safe?

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Is Equity Release Safe?

Equity release has come a long way since the plans of the 80s and 90s which were relatively unsafe. As an industry, it is now regulated by the Financial Conduct Authority which ensures the safety of the plans on offer. Also, there is a governing body called the Equity Release Council which sets out must have features that provide an extra safety net.

Responsible Equity Release are under the regulatory authority of the Financial Conduct and only advise on plans that adhere to the strict Equity Release Council guidelines. This way you know that equity release is safe and looks after your long term interests.

The particular guarantees that make equity release safe are:

  • No Negative Equity Guarantee – You will never owe more than the value of your home
  • The right to move property – You can move the plan to a suitable property should you want to move at a later date
  • The right to independent legal advice – The lenders will not make you use their solicitors on in-house legal team
  • The right to clear fair presentation of the plans -
  • Advice from an adviser with equity release qualifications

Of course, it is important to get financial advice when determining whether it is a good idea or not, based on your personal circumstances. The first step would be to request a live quote & comparison from us using our calculator and to read our 12 page guide to releasing equity from your home.

Alternatively, give us a call on 0800 012 4181.


Is equity release a good idea?

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Is Equity Release A Good Idea?

 

If you are asking ‘Is equity release a good idea? you need to consider the following bullet points:

  • Could I use some extra money around the place?
  • Do I want to leave my actual property, rather than a monetary inheritance, to my beneficiaries?
  • Am I over the age of 55?
  • Do I think property prices may go up or down in the future?
  • Is there more I want to do in my retired years that I can’t currently afford to?
  • Do I want the comfort of a cash cushion to draw upon if needed?

If you do want or need some extra money around the place and you don’t want to leave your property intact to your beneficiaries, then equity release is a good idea. If you do want to leave your property, then there may be alternative ways to raise the money you require. It is a decision to make based upon your current and long term needs.

If you feel property prices will increase in the future, then it may well be an even better idea because the money you take now will be offset by future house prices. If you believe property prices will fall, then you will be comforted to know all equity release plans carry a no negative equity guarantee which promises that no matter how low house prices go in the future, you will never owe more than the value of your home.

Of course, it is important to get financial advice when determining whether it is a good idea or not, based on your personal circumstances. The first step would be to request a live quote & comparison from us using our calculator and to read our 12 page guide to releasing equity from your home.

Alternatively, give us a call on 0800 012 4181.


Why has equity release become so popular

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Advancements have been occurring in the equity release industry almost monthly. Plans are changing and adapting to the needs of the UK, as equity release looks to become an integral part of financial planning into the golden years of retirement. The innovations coincide with a bigger recent need for the extra capital that is locked up in the property of retired people. According to MGM Advantage, retired Britons across the UK are straddled with £96,000,000,000 of debt, at a an average of around £10,000 per person. Low stock market returns and annuities at historic lows have all contributed. However, with plans designed to take into account your medical and lifestyle history, interest only plans coming to the fore where you can choose how much you want to contribute, along with plans that allow you to dip in and out of a reserve fund, the market has finally grown up. The media recognise this and are starting to write positive reviews of products and the industry is ready to go.


The state retirement & pension age

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A representative from Responsible Equity Release was present at the European Commission’s debate on Active Ageing, held at Europe House in London. Discussed were the opportunities and problems that arise from the scientific wonders in the field of longevity. Credit Suisse head of demographics suggested we all embrace increasing longevity by adapting the workplace to fit an older workforce. Such innovation was found present in John Deere, the tractor and machinery manufacturer. Small changes involving less low ground work has revolutionised their business – to the point where they can keep all their experienced and wiser workforce active in the workplace for longer. This can only be a good thing. The longevity issue does raise some points financially, as the money allocated to retirement does have to go further. This is where equity release plan come in as they can turn your property into an income stream. It shouldn’t affect state benefits or pension credit either, as long as it is done correctly.


Interest Only Mortgages & Equity Release

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You may have read Responsible Equity Release in the newspapers talking about the interest only mortgages that are coming to an end without a suitable repayment vehicle to settle the outstanding amounts. Fortunately for the 24,000 people plus who have this problem, a lifetime mortgage could be the solution. An equity release plan of this nature can be the repayment vehicle that these interest only mortgages are missing.

We have raised awareness through the media outlets and we hope that those who are struggling to repay their interest only can switch their mortgage over to a lifetime mortgage, ensuring they have the right to stay in their property as long as they live.


No Negative Equity Guarantee – Equity Release

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It is one of SHIP’s most popular and recognised equity release guarantees. But what does it mean to the customer?

The no negative equity guarantee is a set-in-stone rule of SHIP governed equity release plans. It means that you will never owe more than the value of your home – no matter what.

Historically, house prices have always risen over long periods of time. Logically, this makes sense too as the population grows over time, thus increasing demand.

However, what should happen if property prices fall over the long term? The fixed interest rate will guarantee that your initial loan will grow exactly in the manner illustrated when you took out the plan. If property prices were to unexpectedly fall, then there may be a time in the future when the loan amount is higher than the price of the property. Fortunately, with a no-negative equity guarantee, the maximum repayable amount will never exceed the price of your property – even if the difference is very sizeable.

This can give you and your loved ones peace of mind that there is no debt left to your estate as a result of you taking out an equity release plan.

Use our equity release calculator to compare rough estimates of the amounts offered by the major equity release providers. Or for a more detailed and personalised comparison, call 0800 012 4180 for a free, no-obligation chat about equity release.


Debt Management Plans & Equity Release

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Equity release is fast becoming a preferred route for many who find themselves in debt management plans. Debt management plans are a popular way of managing debt which could otherwise spiral. However, they are a solution that still requires regular monthly repayments. Equity release is particularly attractive in these cases as there are no monthly repayments to make. The amount one can release with an equity release plan often exceeds the average debt levels of those in a debt management plan; leaving the customer debt-free with extra capital to enjoy life and enough equity left in the home to leave an inheritance to loved ones.

Use our equity release calculator to compare rough estimates of the amounts offered by the major equity release providers. Or for a more detailed and personalised comparison, call 0800 012 4180 for a free, no-obligation chat about equity release.


80% of Equity Release Plans Sold Through Advisers

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According to the Safe Home Income Plans industry body, 80% of equity release plans are now sold through advisers – compared to the remaining 20% being sold direct from the lender. Taking a look deeper into this, it is easy to see why.

When you approach independent financial advisers for advice on equity release, they are able to find a plan suitable for you from the many out there, rather than try and match the plans they have to your circumstances. Not only this, certain plans have different characteristics and requirements – such as the minimum age. If you opt to go direct, you may find yourself talking to an adviser with little experience of your situation, shaped by the limited range of plans they can offer. If you talk to an independent financial advisers, particularly equity release specialists like Responsible, you will find that there aren’t many situations that we haven’t come across because of our whole-of-market status.

You may find that the figures turn to 90% soon enough.

Use our equity release calculator to compare rough estimates of the amounts offered by the major equity release providers. Or for a more detailed and personalised comparison, call 0800 012 4180 for a free, no-obligation chat about equity release.


As pension funds prove insufficient, more seek out equity release

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The Pensions Policy Institute released a report on retirement income today, suggesting that pensions may be insufficient to achieve the quality of life that pensioners desire or require.

The PPI research director, Chris Curry, had this to say

“Many median earners who contribute to DC [defined contribution] pensions at average levels of 10 per cent of salary are unlikely to have sufficient state and private pension income to achieve a desired standard of living in retirement.”

As many equity release experts have been saying in recent years, traditional retirement financing faces many challenges. However, UK pensioners can remain very optimistic in rising to the challenge. Many are sitting on large amounts of equity in their homes. A change in perspective can often find new ways to meet the demands of modern life. Equity Release can now be seen as a first-choice tool in financial planning.

Use our equity release calculator to compare rough estimates of the amounts offered by the major equity release providers. Or for a more detailed and personalised comparison, call 0800 524 4839 for a free, no-obligation chat about equity release.


Why do equity release providers offer different amounts?

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One of the main questions that someone thinking about equity release may have is:

“How much can equity can I take out of my home?”

The amounts that the different equity release providers can offer you does depend on a wide variety of factors. These factors can usually be split up into two seperate groups – Homeowner Characteristics and Plan Characteristics.

The homeowner characteristics that usually affect how much you can release are the age of the homeowner and the value of their property.

The Plan Characteristics that usually determine the equity release amount are whether its a drawdown plan or a lump sum plan (the drawdown plan giving you the option to have a reserve on which to draw and the lump sum plan giving you all the cash at once). The interest rate can also determine which plan allows you to release the most.

Use our equity release calculator to compare rough estimates of the amounts offered by the major equity release providers. Or for a more detailed and personalised comparison, call 0800 524 4853 for a free, no-obligation chat about equity release.