Patrick Roach
Low Cost Retirement Property
There is no doubt that equity release plans are attractive to many people. The historically high value of property can make equity release a viable solution.
You may be familiar with the two forms of equity release. If you have a life time mortgage version you take out mortgage where the interest is rolled up and does not become payable until your death, or until you need to move to a residential/nursing home. The loan increases as you get older but the balance of the equity remains in your estate so you benefit if property prices increase.
If you take a reversion plan you generally give up all the equity in your home in return for a larger lump sum. There is no interest added to the capital released from your home but you do not benefit from increasing property prices.
Either version may suit, depending on your circumstances.
A Brighton based company offers home reversion plans with an interesting twist. Their Life Interest Plan enables you to buy a lifetime lease in a retirement property well below the market purchase price. There are apartments available throughout the South-West.
With the Life Interest Plan the property remains yours to occupy during your life, reverting to the company on your death. Unlike a tenant paying rent, the longer you live the better off you are! You can live in a safe and secure environment in a location that suits you. If you already own a property you can sell it to release capital to invest for income or spend as you wish.
This company also offer what they describe as a stress free way of selling your home. It is known as the “Home Exchange Plan” and works like this: Your home is independently valued and you are paid approximately 90%, with no estate agents fees. In effect with ‘Home Exchange’ you are provided with a guaranteed cash buyer for your current home. Not a bad thing bearing in mind the recent slow down in the property market.
The same company also offer a “Find and Afford” Plan to those aged 60 and over. Basically you buy a property of your choice and they calculate the money they will release to you on completion, based on the property’s valuation and your age(s). Their “Equity Release” Plan works in a similar way to “Find and Afford” but on your existing property, rather than on a new one. In both cases the objective is to help those at retirement age unlock some capital to invest or spend as they wish.
If you are considering equity release one of above approaches could be another consideration. However we would advise that before a decision is made in what is a complex area you should seek specialist Independent financial Advice to ensure that you understand the advantages and disadvantages before deciding whether it is suitable for you.
To request an information pack for the schemes outlined above please use our contact page with no charge or obligation.
To Fully Understand the features and risks of a Lifetime Mortgage, ask for a personalised illustration.