Equity Release – A more modern approach

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Frequently asked questions & concerns

Aspen Financial Services has been providing advice to clients seeking to borrow money into retirement since we were established 15 years ago

Our mortgage advisers have a wealth of experience, with over 26 years providing advice.  During that time, regulation and product innovation has moved on, creating a much better environment for borrowers

Regulation

First of all, any adviser wishing to provide advice on Equity Release products, must hold a specific qualification, licence to advise (Financial Conduct Authority) and the firm must also hold specific permission to allow their advisers to trade

This means the advice provided is insured and must meet regulatory standards

Misconceptions

Let’s be honest, every client needs to know their house is safe and it won’t be lost to unscrupulous lenders.   So, I have outlined below some answers to the often asked questions we get

Will I still own my home?

A Lifetime mortgage (equity release) will allow you to live in your home until you die or move into long-term care home

Most providers we work with allow around 12-months for the estate to be sorted out following death (interest will still accrue), but I have found them to be understanding and allow the estate to go through its processes

Will I have to make monthly payments?

Unlike a standard residential mortgage, lifetime mortgages don’t require you to make monthly payments.  In fact they do not expect repayment until death of the borrower (last borrower if joint), or until you go into a care home permanently

They seem very complicated

Lifetime mortgages are only available as an advised product (see regulation above)

The adviser and also a Solicitor (who sorts out the legal parts) will be on hand to guide you through every step.  We do not normally recommend a provider who is not part of the Equity Release Council, which is a body that maintains standards, communication rules and additional regulation for lenders

I don’t want my children to inherit a debt

Most lifetime mortgages come with a No Negative Equity guarantee, which means that the estate will not have to pay back more than the value of the property as long as it is sold for the best price obtainable at the time

Can I leave anything to my children/grandchildren

Taking out a lifetime mortgage will reduce the amount of inheritance you leave

Some providers offer an Inheritance Protection Guarantee, which allows you to safeguard a percentage of the value of your home to leave to your beneficiaries (this will limit the amount you can borrow)

What if I want to move home later?

As already mentioned, the mortgage is designed to be repaid on death etc.  However, there are portable lifetime mortgages, that can be moved from one property to another

This can be a bit complex, especially if you move to a smaller and lower value property.  Some lenders do offer downsizing protection and this helps to mitigate possible early repayment fees if you have to repay some of the lifetime mortgage as part of the move

Will it affect my benefits?

This can be an issue.  State Pension and Disability benefits are not affected

Means tested benefits might be affected

Is it costly?

All costs and charges will be highlighted at illustration stage and well before you consider going ahead

You will need a Solicitor to conduct the conveyancing element (putting the loan on the Deeds, checking you own the property etc on behalf of the lender)

Some lenders charge a valuation fee (most currently do not), they may charge a completion or admin fee on certain interest rates

Repaying earlier than expected will incur costs.  Most lenders allow fee free overpayments or regular monthly payments if you wish to keep interest rate compounding down

Compounding Interest Rates

As you do not have to make any payments to the lifetime mortgage, the monthly interest is added to the loan

The nature of this is that at the end of each year, your lifetime mortgage will increase and the longer you have it, the more it increases

Value of advice

We have a vast wealth of experience in this marketplace.  You will see from the considerations above, it is very important we understand your needs and expectations, so that the best lender and type of lifetime mortgage is recommended and implemented for you

We will take all the time you need and meet with you and any family members / friends you wish to help make the process easier