If you missed our Equity Release Webinar, it’s now available to watch on demand. The webinar features expert panelists Simon Restieaux and Gary Shipp and features a guest appearance from Matthew Taylor from Equilaw on the legal process and what delays cases.
Available on demand
Watch the complete webinar or watch the section or sections that interest you. The webinar has been broken down and the following topics are available to watch:
- What is Equity Release?
- Dispelling the myths
- The changing equity release market
- Equity release and the alternatives
- Equity release and tax including its role in Inheritance tax mitigation
- Care home fees and care in your home
- Independent Legal advice
- Question and Answer session
The Complete Equity Release Webinar
What is Equity Release?
Equity Release: Dispelling the Myths
The Changing Equity Release Market
Equity Release and the alternatives
Equity Release and Tax including its role in Inheritance Tax Mitigation
Equity Release: Care Home Fees and Care in your Home
Webinar: Equity Release Question and Answer Session
Equity Release Webinar: Your questions answered
The webinar included a question-and-answer session and we have answered all the questions below:
Question: Are there different types of equity release, or is a lifetime mortgage 'de facto' equity release?
Yes, there are different types of equity release schemes in the UK. The two main types are lifetime mortgages and home reversion plans. A lifetime mortgage is the most common form of equity release and involves borrowing against the value of your home while retaining ownership. Home reversion plans, on the other hand, involve selling a portion or all of your property and becoming a “beneficial tenant” to a reversion company in exchange for a lump sum or regular payments. We don’t do home reversion plans as we don’t think they are what clients generally want.
Question: Is the equity release rate fixed or variable?
Equity release interest rates can be either fixed or variable. Fixed-rate equity release plans provide a fixed interest rate for the duration of the loan, giving you certainty about the interest charges. Variable-rate equity release plans have interest rates that can fluctuate over time, typically tied to a reference rate such as the Government GILT rates / yields. However, plans currently tend to all be on fixed rate basis for life. If you use a drawdown facility, the interest rate is fixed for each part as you extract it.
Question: What is the typical/average length of time between expressing interest and cash release, assuming no delays/blockers relating to processing/admin, etc.?
The time between expressing interest in equity release and receiving the cash can vary depending on several factors, including the complexity of your case and the efficiency of the provider you choose. On average, the process can take anywhere from 4 to 12 weeks. It's important to note that some lenders may have faster or slower processing times, so it's advisable to inquire with specific providers for more accurate timelines.
Question: I have read online about a product (Aviva) that allows you to protect downsizing property from early repayment penalties after 5 years. Is this correct?
Yes, Aviva offers an equity release product called the "Lifestyle Flexible Option." This plan allows you to repay the loan without incurring early repayment charges if you move to a smaller property and meet certain criteria after 3 years. Most lenders also offer this feature for instance Standard Life offer this feature from day one so there is no 3 year waiting period.
Question: Do you also cover Scotland?
Yes, equity release is available in Scotland and TaxAssist Financial Services can help with your enquiry. However, the specific regulations and products may differ from those in the rest of the UK. It's advisable to consult with a specialist legal firm familiar with the legal side of Scottish equity release.
Question: If you were planning on purchasing a £1 million farm, how would you structure it to pass it to a sibling further down the line? I'm 36 years old.
Structuring the ownership and inheritance of a property involves complex legal and tax considerations. In the case of passing a farm to a sibling, various options such as trusts, wills, or joint ownership structures could be explored. It is highly recommended to seek professional advice from a solicitor or estate planning expert with expertise in agricultural properties and inheritance matters to devise a suitable strategy based on your specific circumstances. Tax Consulting and TaxAssist Financial Services can help with Inheritance Tax planning,
Question: With rates being high at the moment, is it a bad time to tie into a higher rate?
Interest rates can fluctuate over time, and it's challenging to predict future movements accurately. If you're concerned about the current interest rates, you may want to explore fixed-rate equity release options to lock in a specific rate for the duration of the loan. Additionally, consulting with a qualified financial advisor can help you assess the current market conditions and make an informed decision based on your individual circumstances.
Question: Who decides the value of the home at the end of the equity release period?
The value of the home at the end of the equity release period is determined by a probate valuation that is arranged by the estates executor. The property value at the time of sale will be subject to market conditions and as such the lender will expect a fair market value to be achieved by the executors.
Question: If you have no children or dependents to leave money to on death, other than your spouse, is equity release a useful way to create pension income?
Equity release can be a useful way to generate additional retirement income if you have no specific beneficiaries other than your spouse. It allows you to unlock the equity tied up in your property, providing you with a lump sum or regular payments to supplement your pension. However, it's important to consider the long-term implications and potential impact on inheritance, as releasing equity will reduce the value of your estate.
Question: Can you only use equity release if you live in the property?
Yes, equity release is typically available to homeowners who reside in the property they wish to release equity from. It's a requirement that you live in the property as your main residence to qualify for most equity release schemes. You can also use Equity Release to purchase a new home you intend to use as your main residence.
Question: Can you use equity release if you live temporarily overseas?
Equity release eligibility typically requires that you live permanently in the property. However, some providers may have specific policies regarding temporary overseas residence. It's best to consult with TaxAssist Financial Services who can inquire on your behalf about lending criteria and any potential restrictions regarding temporary overseas living arrangements.
Question: For people with smaller properties/values, is there a minimum property value that would make equity release less viable?
Equity release providers often have a minimum property value requirement, which can vary between lenders. While there is no fixed industry-wide minimum, properties below a certain value may face limitations or challenges in accessing equity release schemes. It's advisable to consult with providers or independent financial advisors who specialize in equity release to understand the options available for properties of different values.
Question: You mentioned that there is never any debt passed over, but what if probate cannot achieve the required price? Are they liable for this decision made during probate?
In equity release plans, the repayment of the loan is typically triggered by the homeowner's death or when they move into long-term care. If the proceeds from the sale of the property during probate are insufficient to repay the outstanding loan, equity release providers generally have specific procedures in place to handle such situations known as the No Negative Equity Guarantee. The liability for any shortfall would typically be limited to the value of the property, and the lender would not pursue the borrower's estate or beneficiaries for any further payment again due to the No Negative Equity Guarantee which is on all plans we recommend.
Question: Is there a maximum lending ratio (to property value) for equity release?
Yes, equity release providers typically have maximum lending ratios in place to determine the amount they are willing to lend against the property's value. The maximum lending ratio varies between lenders and can be influenced by factors such as your age, health, and property type/value. The older you are, the more you can release from the property. It's advisable to consult with our team of experts to understand the specific lending ratios offered by different equity release schemes.
Please note that tax planning is not regulated by the FCA