Equity release is one of the easiest ways to access capital without having to move out of your home.

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1 1 Equity Release

2 Equity release is a way of taking cash from your home without having to move out of your property or sell it. If you are a homeowner and aged 55 or over, you could release a tax-free lump sum or a regular income from the value of your home. This could be used towards home improvements, to help loved ones, to simply spend as you wish, or to help fund long-term care or nursing fees. Equity release is one of the easiest ways to access capital without having to move out of your home. There are broadly two main types of equity release schemes lifetime mortgages and home reversions and deciding which one to choose is a decision we can advise on. As Independent Financial Advisers, we can access equity release plans from across the market, meaning we are never tied to just one provider, giving you a greater choice to meet your individual needs. 2

3 Lifetime Mortgages Lifetime mortgages are the most common type of scheme. This is where you release a lump sum of equity from the value of your property. The money released is tax free and can be spent on whatever you want. You can take it as a lump sum or you have the opportunity to take money when you need it, known as a draw-down. The benefits of a lifetime mortgage also include retaining full ownership of your property, and therefore taking advantage of any future increase in its value. There are no regular repayments to make as the mortgage, plus any interest accumulated, will be repaid from the sale of the property when you pass away or decide to sell it. However, there is an option to make regular payments on some products which may reduce the overall debt over time. The interest rate on the sum you have released can be fixed, meaning there are no surprises or rises, so you will always know how much money you owe. The percentage of the value of your property you can borrow will depend on your age. The older you are, the more you will be able to borrow. For example, at 65 you can normally borrow 20% to 25% of your property; if you are older you can borrow as much as 50%. 3

4 Lifetime Mortgage Case Study Mrs Smith, almost 99 years old, was receiving care in her home (valued at 280,000). Her savings and investment funds were running low due to the cost of her care (around 36,500 per annum), as her income only paid for half of the costs. Both Mrs Smith and her children decided to look at releasing money from the house to pay for the care she was receiving. The children didn t want their mother to move into a care home, as she liked the familiarity of her home and the carers who looked after her. 40,000 was arranged as a roll up mortgage, with an interest rate of 5.48%, which was fixed for the lifetime of Mrs Smith. This meant that two years worth of fees were immediately available to the family without the need to make any repayments as the interest was being rolled up on top of the loan. To understand the features and risks, ask for a personalised illustration. 4

5 Home Reversion Schemes A home reversion plan enables you to sell a portion, or indeed all of your home to a reversion company or individual, for a lump sum or regular income. Although you no longer own part or all of your home, you still retain the right to live in your property, free of charge, for the length of your life. A reversion company buys or arranges for another party to buy the portion of your home that you want to sell and you get the sale proceeds as regular instalments or as a single lump sum. You will generally receive less than the market value as the buyer cannot re-sell the property until your death. As you have the choice of selling only part of your property, the rest of the property s value can be left as an inheritance; to pass on to loved ones upon your death. The older you are when you start a home reversion scheme, the higher the percentage you will get of your home s market value. Usually, for this reason, they are best suited for those over 70. 5

6 Home Reversion Schemes Case Study Mr Jones, 69, a retired widower, owned a property worth around 400,000. With no children and having worked all his life, Mr Jones wanted to make the most of his retirement. He wanted to raise around 65,000 to purchase a small boat, and fund his hobbies and frequent holidays. Mr Jones also wanted to put a small sum aside as an emergency savings fund. Mr Jones also wanted to be able to guarantee he could raise further funds from his property in the future. A part home reversion was the natural solution for Mr Jones and the plan raised a tax-free lump sum of 65,000. Mr Jones was pleased with the recommendation and is secure in the knowledge that the equity he holds in his property will remain unchanged unless he chooses to sell a further share. He obtained the additional cash he needed to provide him with financial security in retirement, an emergency savings fund, a guarantee of further releases and the certainty of a legacy to leave behind to his beneficiaries. 6

7 + Why choose Ellis Bates? Access to the whole of the equity release market Personal, honest, impartial advice Dedicated adviser and equity release team Initial consultation at our expense Highly experienced established since 1980 The complexity of equity release schemes means taking financial advice is crucial before you make any lifelong commitments. As a firm of Independent Financial Advisers, we can provide you with the specialist advice and information you need. With access to the whole of the equity release market, we provide independent research on your behalf. This ensures research is undertaken from the entirety of lenders on the market, to guarantee the most appropriate equity release scheme is selected to meet your individual requirements. As part of our honest, open advice, we will never pressurise you to go ahead with an equity release scheme. With a no cost to you consultation, our advisers will establish straight away, as to whether equity release is the right option for you. 7

8 Harrogate Office Ellis Bates Financial Solutions Ltd Adam House Ripon Way Harrogate HG1 2AU Newcastle Office Ellis Bates Financial Solutions Ltd Grainger Chambers Hood Street Newcastle upon Tyne NE1 6JQ t: t: f: f: e: e: Ellis Bates is authorised and regulated by the Financial Conduct Authority Company Registration Number: