Will you be hit by the interest-only time bomb?
The 80's and 90's have a lot to answer for.
No, not shoulder pads, Maradona's 'Hand of God' or Gazza's tears; but the thousands of interest-only mortgages which were sold at the time. As result, according to Citizens Advice, nearly one million homeowners have no way of paying off their mortgages and nearly half haven't even thought about the issue.
Homeowners who are in this position often don't have a repayment vehicle in place to pay off their mortgage, leaving them with the headache of how they will repay the debt.
There are a number of options. Some take in a lodger, while others downsize, but these don't suit everyone. One alternative for the over 55s is equity release.
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Equity release may involve taking out a lifetime mortgage: borrowing money that will need to be repaid with interest when they die or sell the house. However, it allows homeowners who are aged 55 and over to release some of the equity tied up in their home and turn it into tax-free cash.
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Equity release market conditions, such as low lifetime mortgage interest rates and house prices are also favourable at the moment and in the last year we have seen a significant uplift in the number of interest-only borrowers turning to equity release to repay their outstanding mortgage.
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UK average house prices have risen by 17% in the last three years. This means homeowners could have more equity than they thought and may be able to access enough tax-free cash to cover their mortgage shortfall and even have some left over to spend on anything they wish.
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What's more, it has recently been reported by The National Association of Estate Agents and the Association of Residential Letting Agents that UK house prices will rise by 50% in the next ten years. This is great news for homeowners who want to free up some equity, because with many equity release plans, they can maintain 100% ownership, meaning they could benefit from any future increase in its value.
One some cases equity release also means there are no monthly repayments. There are also plans that enable people to move home in the future and protect part of the property's value - so money can be left for their beneficiaries.
Click here to find out how much cash you could unlock
Those who are considering releasing the cash locked up in their home should seek independent, impartial advice to ensure that it is the best option for them.
Whether you are looking to release cash because you are one of the nearly million interest-only mortgage holders that may fall short when you have to make your repayment or are just looking to top up your income, award-winning Age Partnership could help you. Age Partnership are equity release specialists with qualified advisers and will compare the whole of the market and only recommend a plan if it's in your best interests. They will discuss all the options, including what impact it could have on the size of your estate over time and if your entitlement to current and future means-tested benefits may be affected.
They provide initial advice for free and without obligation. Only if you choose to proceed and your case completes would a typical fee of 1.7% of the amount released be payable.
To find out more about equity release including how much money you could release from your home, Click here
Click here to find out how much cash you could unlock
Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration.
