More and more people are choosing to boost their income in retirement with equity release. With average UK house prices being worth 6 times more than average UK earnings, low interest rates, and new equity release product developments, homeowners aged 55 or over are taking advantage of the tax-free money tied up in their home through the most popular type of equity release plan, a lifetime mortgage.
Even as the equity release market continues to grow at a record breaking pace, there are still some common misconceptions about releasing money from your home. Multi-award-winning equity release specialists Age Partnership conducted a survey and identified some of the most common myths...
"I am scared I would lose ownership of my home"
21% of homeowners surveyed believed that they would lose ownership of their home if they took out an equity release plan. However, this is not the case, as with a lifetime mortgage you continue to own 100% of your home1, and have the right to live in your property for life, so as long as you abide by the terms and conditions of your chosen plan.
"If I release equity, this means I won't be able to move home in the future"
Over a third of homeowners didn't think they could move house in the future. All equity release plans offered by lenders that are members of the Equity Release Council are portable. This means that the plan can be moved to another home, so long as the new property is acceptable to the lender, based on their criteria at the time.
However, if downsizing to a lower valued property on a lifetime mortgage for example, the lender may require part of the loan to be repaid in order to keep it within their lending limits at the time.
"I won't have anything left to leave for my family when I die"
24% of homeowners believed another common myth being that, releasing money from their home would mean they have nothing to leave behind for their loved ones.
Whilst releasing equity will reduce the overall value of your estate, any funds remaining after the loan has been repaid is left for your beneficiaries to enjoy. However, in the unlikely event that your home has fallen in value and the sale proceeds are less than the initial loan and the interest accrued, your estate will not be required to pay the difference as equity release offers a 'no-negative equity guarantee'.
Furthermore, some lenders can provide inheritance protection on lifetime mortgage plans which allows you to safeguard a percentage of your home's value.
Hopefully this has helped to clear up some of the common myths surrounding releasing money from your home. If you would like to find out more about equity release and how it could benefit you including the amount of money you could release, visit www.release.agepartnership.co.uk.
Alternatively call Freephone 08000 810 817 to speak to one of Age Partnership's qualified advisors as they can discuss all the options with you, including what impact it could on the size of your estate over time, the amount of inheritance that can be left behind and if your entitlement to means-tested benefits could be affected now or in the future.
1 You only continue to own your home with a lifetime mortgage, secured against your property.
Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.
Age Partnership provide initial advice for free and without obligation. Only if you choose to proceed and your case completes would a typical fee of 1.85% of the amount released be payable.