Tag Archives: Lifetime Mortgage Adviser

How Can the Proceeds from Equity Release Schemes Be Spent?

How Can the Proceeds from Equity Release Schemes Be Spent?

There are two main reasons why equity has caught on and become increasingly popular in the past few years. Firstly, it allows homeowners to access the cash value of their asset without having to sell it or move out, and secondly, there are no constraints placed by equity release providers on how the money can be spent.

Different people have different reasons for wanting to release equity from their home. Most equity release schemes allow for release either options in the form of a single lump sum or as regular withdrawals from a drawdown facility which can then be utilised as an income. This makes it a flexible option for people with a variety of needs, whether it is someone who needs cash for funding a holiday or someone who needs a supplementary income during retirement.

Having said that, it is important to note that there are some things outlined in the equity release plan contract that one cannot do, for instance make major alterations to the property that could have a significant impact on its value etc. Also, should anyone else move into the property, then the lender needs informing. The lender with then require an equity release waiver form must be signed by the new occupant so as to waive their rights behind the lenders, in case the main party died in the meantime.

In such situations it is always advisable to check with the lender beforehand to gain acceptance of the plans, otherwise should the lender find out any other way you could be in breach of the equity release terms and conditions.

Check the alternatives

Equity release is a flexible tool that allows people to use the released money to meet their individual goals. The key factor in deciding whether one needs to release equity from their property to meet these goals is whether there are other options that could help you achieve the same aims. Therefore, it is the duty of the lifetime mortgage adviser to consider all the alternative solutions that may exist before proceeding with any recommendation for an equity release scheme.

Once these alternatives have been eliminated it is only then that your lifetime mortgage financial adviser can then help you understand if equity release is the best way for you to meet your needs and attain your goals. Discussing your goals with your adviser can also help you understand if there could be another better way to achieve the same thing without incurring the same risks.

For instance, has your adviser consider ALL of the following: –

  • Would you be better off downsizing to a smaller property instead of releasing equity?
  • Could you use any existing savings or investments before taking any release of equity?
  • Be eligible for any means tested benefits that could help you?
  • Ask your children or relatives for financial assistance?
  • If home improvements are planned, are there any grants available that could cover the costs?
  • Consider other types of finance such as personal loans, credit cards, hire purchase, interest only mortgage?
  • Take in a lodger which could provide a source of extra income?
  • Reduce one’s expenses to provide additional disposable income?

A financial adviser could help you explore all the possible options and find the optimum solution.

For those who find that equity release is the best option for them, there are many ways in which the released equity can be used and there are no constraints on how the money can be spent. As mentioned above, everyone has their individual reasons for releasing equity, but some popular uses for released equity include a cash gift to the kids or grandchildren, funding a holiday, home improvement works, a new car, repaying an existing mortgage or debt consolidation or even buying a second property such as a holiday home.

Equity release schemes provide the freedom to carry out your long-term desires, something that wouldn’t have otherwise have been possible. However, there is always a word of caution which is that equity release schemes are not suitable for everyone & do come with a health warning – it will reduce your inheritance!

 

What About Life Before the Equity Release Calculator?

What about life before the Equity Release Calculator?

The growing popularity of equity release schemes has driven a sea of change in the world of retirement mortgages. For one, increases in demand from customers has led to more flexible, innovative and secure equity release solutions being developed all the time. As more and more players enter the market, there has also been an increase in the number of comparison and information websites whom themselves are innovating to provide new tools to help in conducting equity release research.

One of these latest tools is the equity release calculator which was once a novel tool offered only by pioneering websites like Equity Release Supermarket. Today however, the equity release calculator has become a common sight and very common across the marketplace.

What is an equity release calculator?

An equity release calculator is a highly useful application as it allows users to get a fairly good idea of how much you can borrow from the whole of the equity release market. Useful as it is, though, it is a fairly recent development. Prior to the availability of this simple tool, the only way for potential clients to find out the maximum release available on any particular plan would be to contact the equity release provider either by phone, or in person!

This seemed like an awfully tedious way to find out something that could be calculated rather quickly based on a few simple facts. Companies like Equity Release Supermarket therefore invested in a simple application that, once users entered certain basic facts such as age and property value, could calculate maximum borrowing based on a simple algorithm used by equity release companies to calculate borrowing. This application provided the client with the equity release calculation upon which they could base their spending plans.

Today, numerous websites have an equity release calculator. While this is a good thing that enables users to quickly find out maximum borrowing, equity release calculators are now also being used as a form of marketing or advertising to attract potential customers by only promoting certain equity release plans over others. The point of an equity release calculator is to provide a functional and entirely unbiased tool for users to work out the maximum average amount they could release. And the role of equity release comparison websites is to provide impartial information and objective advice about the different options available.

Using an equity release calculator as a marketing ploy seems not only to compromise the ethics behind providing impartial advice and information on websites, but also undermines the entire point of offering such a calculation application to users.

Nevertheless, the fact is that the equity release calculator offered by reputable comparison sites has provided a hassle free and quick way for users to calculate maximum borrowing from an equity release plan. This can form part of the initial equity release research into lifetime mortgage schemes and act as an in-road into preliminary discussions with your lifetime mortgage adviser.

For further information on how to calculate the maximum equity release lump sum call the Equity Release Supermarket lifetime mortgage department on Freephone 0800 678 5159.