For most of us, our home is the most expensive purchase that we will ever make, and the most valuable asset we will ever own. While most of its value remains locked up until you sell, there are ways to access it if there comes a time that you need to get your hands on some funds. Here’s what you need to know about equity release, says Chartered Legal Executive, Stuart Harries from Debenhams Ottaway.

Equity release is becoming a popular way for home owners to tap into the value of their home by borrowing against its value. Bear in mind that it is usually limited to people aged 55 and over who have paid off their mortgage or don’t have much left to pay.

If you are eligible for equity release, it can be a useful tool if you want to access some cash, but don’t want to move or downsize. It is a way of freeing up the value of your home, so you can use it for whatever purpose you want, whether to pay for an extension, a big trip, or your child or grandchild’s education.

The main advantage of equity release is that there are no immediate regular repayments. If you are asset rich but your income is low, you don’t have to worry about finding the money every month to make a repayment. You can also borrow a large sum as the loan is assessed on the property itself and not necessarily on your ability to repay, which is often the case with a personal loan. If you have earmarked the money for your loved ones, you are entitled to make it as a gift during your lifetime, which can limit your liability for inheritance tax in future years.

House model in hands with documents and money on desk

On the flip side, equity release can affect your ability to claim certain benefits should you need to do so in the future, and it will diminish your estate once you pass away. The original capital sum is secured against the house, and repaid when the house is sold. The proceeds of the house sale will be initially used to pay off the loan, including the interest, which can be substantial. This also means that a specific cash gift in a Will could be affected if there is not be enough money left in the estate.
It’s also worth noting that the mortgage loan must be paid off in full if you wish to pass down a property through the generations.

Debenhams Ottaway, provides personal advice and straight forward one-to-one consultations with clients to ensure that they are fully informed about the obligations and consequences involved in big life decisions.

To find out more about equity release contact Stuart Harries on 01727 738221 or sh@debenhamsottaway.co.uk or visit debenhamsottaway.co.uk

How your home could help you: 5 things to know about equity release

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