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Mis-sold Equity Release. Is It Right For You?


Equity release is a way of freeing up some of the value of your home without having to move. It is available to homeowners aged 55 and over who have paid off most or all of their mortgage. There are two main types of equity release products: lifetime mortgages and home reversion plans.


With a lifetime mortgage, you take out a loan against your home that is repaid when you die or move into long-term care. You can choose to receive the money as a lump sum, a regular income, or a combination of both. You can also decide whether to make any interest payments or let the interest roll up and add to the loan amount. You retain full ownership of your home and can continue to live in it as long as you wish.


With a home reversion plan, you sell part or all of your home to a provider in exchange for a lump sum or a regular income. You can stay in your home as a tenant, usually rent-free, for the rest of your life or until you move into long-term care. You give up some or all of the ownership of your home and may not benefit from any future increase in its value.


The amount of money you can get from equity release depends on your age, the value of your home, and the type of product you choose. You can use an equity release calculator to get an estimate of how much you can raise from your property.

You can use the cash from equity release for any reasonable and legal purpose, but some of the common reasons people choose to do so are:

  • To supplement your retirement income and cover your living expenses

  • To pay off any existing debts or loans, such as credit cards or car finance

  • To make home improvements or adaptations to suit your changing needs

  • To help your family or friends financially, such as paying for education, weddings, or deposits

  • To enjoy your later life and treat yourself to holidays, hobbies or gifts

However, equity release is not suitable for everyone and there are some drawbacks and risks to consider, such as:

  • It will reduce the value of your estate and the inheritance you leave to your beneficiaries

  • It may affect your eligibility for some means-tested benefits or tax obligations

  • It may limit your options to move or downsize in the future

  • It may cost more than other alternatives, such as selling your home or taking out a conventional mortgage

  • It may not be the best option if you have dependents living with you or if you want to preserve your home for your family

Therefore, before you decide to take out equity release, you should seek independent advice from a qualified adviser who can explain the pros and cons of different products and help you find the best solution for your circumstances. You should also discuss your plans with your family and anyone else who may be affected by your decision.


LIFETIME MORTGAGE OR HOME REVERSION?


The difference between a lifetime mortgage and a home reversion plan is that with a lifetime mortgage you retain ownership of your home, whereas with a home reversion plan you sell part or all of your home to a provider in exchange for a lump sum or a regular income.


With a lifetime mortgage, you take out a loan against your home that is repaid when you die or move into long-term care. You can choose to receive the money as a lump sum, a regular income, or a combination of both. You can also decide whether to make any interest payments or let the interest roll up and add to the loan amount. You retain full ownership of your home and can continue to live in it as long as you wish.


With a home reversion plan, you sell part or all of your home to a provider in exchange for a lump sum or a regular income. You can stay in your home as a tenant, usually rent-free, for the rest of your life or until you move into long-term care. You give up some or all of the ownership of your home and may not benefit from any future increase in its value.


Both types of equity release have advantages and disadvantages, and you should seek independent advice from a qualified adviser before making a decision. You should also discuss your plans with your family and anyone else who may be affected by your decision.


Some possible follow-up questions are:

  • How much money can I get from equity release?

  • What are the costs and risks of equity release?

  • How does equity release affect my tax and benefits?

  • What are the alternatives to equity release?

WHAT IS THE CRITERIA FOR TAKING OUT EQUITY RELEASE?

The eligibility criteria for equity release are:

  • You are aged 55 or over (or 65 for a home reversion plan).

  • You are a homeowner and own property in the UK.

  • Your property is worth at least £70,000.

  • You have little or no mortgage left on your property.

Equity release is a way of freeing up some of the value of your home without having to move. There are two main types of equity release products: lifetime mortgages and home reversion plans. You should seek independent advice from a qualified adviser before deciding to take out equity release, as it may have implications for your tax, benefits, inheritance, and future options.


HOW MUCH CAN I BORROW UNDER EQUITY RELEASE?


The maximum amount of money you can get from equity release depends on several factors, such as your age, the value of your home, the type of product you choose, and your health and lifestyle. According to MoneyHelper, the maximum amount you can borrow with equity release is usually up to 60% of the value of your home. However, some providers may offer more or less depending on your individual circumstances.

However, this is only a guide and the actual amount you can get may vary. Therefore, it is advisable to seek independent advice from a qualified adviser who can compare different products and find the best deal for you.


CAN I STILL MOVE HOME WITH EQUITY RELEASE?


Yes, you can still move house if you have taken out equity release, as long as your new property meets the criteria of your equity release provider. However, there are some factors to consider before you decide to do so, such as:

  • The type of equity release product you have. There are two main types: lifetime mortgages and home reversion plans. With a lifetime mortgage, you can usually transfer your debt to your new home, as long as it is of equal or lower value than your current one. With a home reversion plan, you may need to buy back the share of your home that you sold to the provider or sell it to them at the current market value.

  • The costs and fees involved. Moving house with equity release may incur additional charges, such as valuation fees, legal fees, early repayment charges, or exit fees. You should check with your provider and adviser what these are and how they will affect your equity release balance.

  • The impact on your inheritance and benefits. Moving house with equity release may affect the amount of equity you have left in your home, and therefore the amount you can leave to your beneficiaries. It may also affect your eligibility for some means-tested benefits, such as pension credit or council tax support, depending on the value of your new home and the amount of equity you release from it.

Therefore, before you move house with equity release, you should seek independent advice from a qualified adviser who can help you weigh the pros and cons of different options and find the best solution for your circumstances. You should also discuss your plans with your family and anyone else who may be affected by your decision.


AND FINALLY……


This information is for general guidance only and may not be suitable for your specific needs and circumstances. You should always seek professional financial advice before making any significant financial decisions.



If you feel you have been mis-sold Equity Release contact Claimline Legal today for a free no obligation case review. Call us now on 0800 779 7457 or go to our website at www.missoldequityrelease.co.uk

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