In association with Key Retirement Solutions THE COMPLETE GUIDE TO. equity release

Transcription

1 In association with Key Retirement Solutions THE COMPLETE GUIDE TO equity release

2 CONTENTS 1 EQUITY RELEASE AN INTRODUCTION 2 JACK AND MARIE S STORY 3 WHAT TO CONSIDER 4 YOUR FAMILY 5 GETTING TO KNOW THE PLANS 6 HEALTH AND INHERITANCE 7 EQUITY RELEASE, YOUR HOME AND INHERITANCE 8 JUDITH AND BOB S STORY 9 ANSWERING YOUR QUESTIONS ABOUT EQUITY RELEASE About the author Jeff Prestridge is the well respected personal finance editor of The Mail on Sunday. With a career spanning some 30 years, he has built a reputation for his campaigning journalism and a commitment to making personal finance accessible to all. He has won numerous awards for his work and his personal finance section in The Mail on Sunday is a must read every week. Copyright The Mail on Sunday The information in this guide is correct at February 2014 but tax and benefit rules, interest rates and product features change frequently. The Mail on Sunday and Key Retirement Solutions accept no liability for decisions taken on the sole basis of this information and always recommend you take personal advice. THE COMPLETE GUIDE TO EQUITY RELEASE 3

3 1. EQUITY RELEASE AN INTRODUCTION These are challenging times for people who are close to or in retirement. Low interest rates are resulting in poor returns from deposit savings. The amount of lifetime income most retirees can secure from their pension fund usually through the purchase of an annuity is constantly fluctuating. Yet it is not all financial doom and gloom for hard-pressed retirees. AN INCREASING NUMBER OF PEOPLE ARE NOW BOOSTING THEIR FINANCIAL SITUATION BY USING THE BRICKS AND MORTAR IN THEIR HOMES TO GENERATE EXTRA CASH For many homeowners, a sensible financial solution lies at their very front door in the form of their house. An increasing number of people are now boosting their financial situation by using the bricks and mortar in their homes to generate extra cash. This cash is provided by what is known as an equity release plan an option only open to homeowners aged 55 to 95 with equity available in their home. 4 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 5

4 Equity release is the process of freeing up some of the value of your home after deducting any outstanding mortgage and converting it into cash. Typically, it is a mortgage on which no monthly interest payments are made. Instead, the interest payable is added to the value of the loan increasing the amount outstanding until the loan plus interest is paid off. Normally this would be on the death of the homeowners or their move into long-term care. There is also the option of a home reversion plan, which is discussed later in the guide. The most important fact is that equity release enables the homeowner to remain in his or her home. It could be an ideal option for you, enabling you to improve the quality of your life and maybe do some of the things (a holiday of a lifetime, some much-needed home repairs) you thought your stretched finances would never allow you to do. Equity release is certainly becoming increasingly popular. According to the latest market monitor from Key Retirement Solutions, lending increased in 2013 to 1.06 billion, from million for 2012 an increase of ten per cent. Releasing equity can be an empowering experience. It could allow you to improve the quality of your own life and that of your loved ones and also help to give your children or even your grandchildren a financial boost, whether it is by assisting a child in putting down a deposit on a home or by helping towards paying for a child or grandchild to go to university. Information from Key Retirement Solutions (full year 2013) shows the range of ways homeowners have used the cash generated from equity release. Home and/or garden improvements are the most popular (58 per cent), followed by holidays (31 per cent), paying off debts such as credit cards (30 per cent), treating family and friends (22 per cent), clearing an outstanding mortgage (21 per cent), and helping pay household bills (16 per cent). Not surprisingly, some homeowners remain uneasy about equity release. They fear it is complicated and expensive. Such fears are understandable and providers are continually striving to make their products more consumer friendly. Equity release is certainly not something you should do without seeking both professional and family advice. The objective of this guide is to provide you with all the information necessary to help you to make an informed choice, if you think that equity release could be the way forward for you and your family. I hope you find the guide helpful. 2. JACK AND MARIE S STORY Regular Mail on Sunday readers and golf enthusiasts Jack and Marie Lally, from Leicester, are living their retirement dreams after releasing some of the cash tied up in their home. Jack, 71, retired three years ago and now has the time and money to spend living life to the full. I d done my research on equity release, but to be honest was quite bewildered with all the different companies out there and wanted to make sure I spoke to an expert in the field, says Jack. We met a local adviser from Key Retirement Solutions and he explained everything in great detail. Equity release seemed a perfect solution to release some extra money to really enjoy ourselves. We released 57,000 with a drawdown lifetime mortgage, taking an initial amount of 23,000. The rest is sat there CASE STUDY ready for us to take as and when we need it and is a great financial safety net. We both love playing golf and wanted to buy lifetime memberships at our local golf course. It s not a cheap hobby but one we enjoy, especially in good weather! We wanted to update our car, too, and I finally got the Jaguar I d always wanted. Our retirement is fairly well mapped out, thanks to the help of equity release and Key. 6 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 7

5 3. WHAT TO CONSIDER Releasing equity from your home can be an extremely effective and convenient way of boosting your cash in retirement on many levels. You should not take out an equity release plan without weighing up all options and without taking expert advice. If you decide equity release is something you want to consider, it will be one of the biggest financial decisions you will make in your lifetime, so it must be right for you and must be set up to benefit you in the best way possible. The lender will also expect you to keep your home in good order, both externally and internally, to ensure it keeps its value and does not fall into a state of disrepair. Without doubt the first question you must ask yourself is: Do I actually need an equity release plan or do I have other options? For example, you may want to consider downsizing moving to a smaller home and releasing cash that way. Downsizing, however, does not come without its own costs or drawbacks. Moving home involves estate agents fees, stamp duty and removal costs. It could also mean moving further away from family and friends and, of course, leaving a home that you have a strong emotional attachment to. If downsizing is not something you want to do, then equity release could be the answer. The best way to find out more is to speak to an adviser who specialises in this area and can research the whole market for the plan which will best suit your needs. It is important to be aware that if you are already claiming or may be eligible in the future to claim any government or local authority benefits (for example, pension credit or help with council tax), releasing equity may affect your entitlement to these. Good legal advice is also imperative. As with all mortgages, equity release plans cannot be implemented without using a solicitor. YOU MAY WANT TO CONSIDER DOWNSIZING MOVING TO A SMALLER HOME AND RELEASING CASH THAT WAY 8 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 9

6 5. GETTING TO KNOW THE PLANS Until now, we ve looked at how equity release can help you. This section looks at the different types of plan available and how they might be suitable for you. 4. YOUR FAMILY It makes great sense to involve your family in such an important decision and your adviser may suggest they be present at a consultation, especially if they are likely to be affected in the long term as the beneficiaries in your will. This is because any plan taken out will reduce the value of any inheritance you leave behind for your family children and grandchildren. The chances are that your family will be supportive and understanding of your decision to release cash from your home and grateful for the fact that you are keeping them informed. Advisers who specialise in equity release are likely to prefer that you include the whole family anyway. Experience suggests that if children or other relatives are kept informed, it can avoid misunderstandings at a later stage. It is also possible that family members may raise pertinent questions you had not thought of, and at the same time may be invaluable when it comes to checking through any relevant documents. If you think that including the family in any decision to take out an equity release plan makes perfect sense, a good starting point is to show them this guide. It will give them a greater understanding of the financial step you are considering. LIFETIME MORTGAGE This is the most popular form of equity release plan. The lender which could be an insurance company, building society or specialist lender determines how much you can borrow. This sum primarily depends upon your age (the older you are, the more you are allowed to borrow), the value of your home (the more it is worth, the more you can borrow). If you suffer from health issues it may be possible to increase the amount you can borrow. To give you an indication of how much you may be able to borrow, a 65-year-old should be able to release up to 30 per cent of the value of his or her home assuming there is no outstanding mortgage and an 80-year-old up to 47 per cent. Unlike a conventional home loan, a lifetime mortgage does not require you to make any regular monthly repayments though some people choose to do so. Instead, interest accrues on the mortgage every month, with the interest rate fixed from the start of the loan. The loan, plus accrued interest, is eventually paid off when the property is sold, either on your death (if you have no surviving partner), the death of your surviving partner, or if you both leave your home permanently to go into care. How much equity is left in your home for your beneficiaries after it has been sold will depend on the amount of lifetime mortgage that has built up and any change in the home s value since the loan was first taken out. In taking out a lifetime mortgage, you remain the owner of your home. Lifetime mortgages come in two main forms. OPTION ONE: DRAWDOWN PLAN This allows you to extract cash from your home in manageable chunks when you most need the money. When you set up your lifetime mortgage, the lender will tell you how much you can borrow overall. You take an initial sum and then draw down the remainder as and when you choose maybe to meet a big household bill or help others in your family. Drawing down the cash in stages as you need it, rather than all in one go, means you reduce the impact of interest charges. This is because you only accrue interest on what is drawn down, not on the overall amount the plan provider has agreed to lend you. Lenders will insist that when you take cash under a drawdown plan, you draw down at least a 10 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 11

7 THE OVERALL FLEXIBILITY OF DRAWDOWN LIFETIME MORTGAGES MAKES THEM A POPULAR CHOICE interest is 6.42 per cent. If they borrowed the 59,000 straight away, the amount that they owed at the end of 17 years would be 169,921. In effect, interest of 110,921 has been added to the loan. But if the same borrower opted instead to stagger their cash withdrawals, they could substantially reduce the amount of interest charged. So, if they took 20,000 immediately, a further 15,000 at the beginning of year five, then 8,000 at the start of year seven, 7,000 at the beginning of year nine and 9,000 at the start of year ten, they would end up owing 129,584 after 17 years. In other words, by drawing down their cash in stages, they have saved themselves 40,337 in interest charges....and OPTION THREE: INTEREST PAYMENT PLANS Some borrowers are now choosing to pay all or part of the monthly interest charges on their lifetime mortgage rather than allow all the interest charges to roll up. By doing this, they can keep control of the amount owed when the plan comes to an end and the home is sold. Interest payment plans are increasingly popular. As well as reducing overall interest charges, these plans are user friendly for example, allowing a borrower to stop their interest payments and convert to a standard lifetime mortgage (where interest is not paid until the end of the plan s term) although doing so may generate a penalty charge. REVERSION PLANS These schemes operate in a different way from lifetime mortgages. As with a lifetime mortgage, the amount of cash you can obtain under a reversion plan increases the older you are. But the lump sum you are given will not represent the market value of your home or the slice you have sold. You will also not accrue interest. This is because the reversion company allows you to remain in your home rent free for the remainder of your life. It does this by granting you a lifetime lease. When you die or go into care, the reversion company gets its share of the property, based upon the sale price. So, for example, if you set up a reversion plan where you sold a 60 per cent share of your home s value in exchange for cash, the company would ultimately take 60 per cent of the eventual sale proceeds of your home when you either die or need long-term care. You always know exactly what proportion of your home you own unlike a lifetime mortgage, where accrued interest rolls up over time. Equally, reversion plans have their disadvantages. They are difficult to reverse once set up so it is important to reiterate that you seek independent advice from an equity release specialist. Also, by selling part or all of your home, you are forgoing the benefit of any future growth on that slice or the whole of your property. Finally, if you pass away soon after taking out a reversion plan, you will have effectively sold your home cheaply. minimum sum typically 2,000. Such plans are not designed to allow you to take small amounts 100 here or there. The overall flexibility of drawdown lifetime mortgages makes them a popular choice. OPTION TWO: LUMP SUM PLAN Here, as its name implies, you borrow a cash sum straight away and accrue interest on the loan immediately. If you want to borrow more at a later stage, you will have no drawdown facility to fall back on. Instead, you will have to go through the application process again paying another set of fees and there is no guarantee you will be allowed to extract more cash. COST: DRAWDOWN V LUMP SUM The table opposite highlights the considerable savings that can be made from taking out a drawdown lifetime mortgage rather than a lump sum plan. Let s assume that someone wishes to extract cash of 59,000 from their home, using a lifetime mortgage where the fixed rate of COMPARISON BETWEEN A STANDARD LIFETIME MORTGAGE AND A DRAWDOWN OPTION OF 59,000 RELEASED OVER 17 YEARS WITH AN INTEREST RATE OF 6.42 PER CENT BASED ON A 68-YEAR-OLD MALE OPTION SINGLE ADVANCE DRAWDOWN DRAWDOWN AT THE BEGINNING OF THE YEAR INITIAL ADVANCE OUTCOME AFTER 17 YEARS INTEREST CHARGED TOTAL OWED 59,000 N/A N/A N/A N/A 110, ,921 20,000 15,000 8,000 7,000 9,000 70, ,584 SAVING 40, THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 13

8 6. HEALTH AND INHERITANCE Although the amount you can borrow from an equity release plan is determined primarily by your age and the value of your home, your health and lifestyle can also influence how much cash you are able to access. HEALTH Unlike most financial products, where poor health or a history of smoking can result in you paying higher premiums, equity release works in the opposite way. That is, if you suffer from a serious health condition or you are a smoker, you may be eligible to release more money under an equity release plan than someone who is in good health. These enhanced payments are made because the plan provider recognises that your life expectancy may be shorter than someone in good health. Serious medical conditions that may result in an enhanced payment include: some types of cancer, diabetes, heart disease, Parkinson s disease and a stroke. INHERITANCE Some people in the past have been put off equity release by the fact that it reduces the overall sum that they can eventually leave to their beneficiaries. Yet there are ways you can use equity release to provide you with much-needed cash while ensuring you take into account the financial 14 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 15

9 interests of those close to you. The latest figures from Key Retirement Solutions indicate that 22 per cent of the cash released from homes via equity release in 2013 was earmarked for treating friends and family everything from helping towards a home deposit for a grandchild to assisting a grandchild with their university fees and helping out with the costs of a wedding. Secondly, some providers of lifetime mortgage plans now allow you to stipulate if you would 22% OF PEOPLE ARE NOW USING PART OF THE PROCEEDS FROM EQUITY RELEASE TO GIFT TO FAMILY AND FRIENDS like a percentage of your home s value set aside as an inheritance. This arrangement is known as protected equity. For example, you might want 20 per cent of your home s value protected. This would mean at least 20 per cent of your home s value would go into your estate when you die and the property is sold. You would also have a guarantee from the equity release provider that the amount repaid to them would never exceed 80 per cent of the home s sale value. Be aware, though, that if you take out a lifetime mortgage with protected equity, you will not be able to borrow as much as you would with a conventional plan. IN A NUTSHELL: LIFETIME MORTGAGES VERSUS REVERSION PLANS Advantages of lifetime mortgages l There are typically no monthly repayments to meet. l You retain full ownership of your property. l If the property increases in value, your estate will still benefit from this. l There is an option to repay the loan at any time. l The cash lump sum is yours to spend as you wish. l Some lifetime mortgages allow you to guarantee an inheritance. l There are plans available which come with a no-negative equity guarantee to ensure the amount you owe will never exceed the value of your home. This means that there will never be any debt left for your loved ones to pay when you pass away. Disadvantages of lifetime mortgages l The amount you leave as an inheritance is reduced. Some lifetime mortgages, however, enable you to protect a percentage of your property so you can secure an inheritance for your loved ones. l If you decide to repay the loan early then an early repayment charge may apply. l Your entitlement to means-tested benefits may be affected; however, an equity release specialist will be able to review your situation in more detail and tell you whether there will be an impact or not. Advantages of a home reversion plan l The cash released can be spent on whatever you like. l You are able to guarantee an inheritance. l Provided you don t sell 100 per cent of your property to the reversion company, then if the property increases in value your estate will still benefit from this and so will the percentage of the property that you own. l The older you are, the more money you will be able to release with a reversion plan. l You can typically raise a larger sum from your home with a reversion plan than would be available with a lifetime mortgage. Disadvantages of a home reversion plan l You will no longer benefit from any future house price rises on the proportion of the property that you have sold. l The amount you leave as an inheritance will be reduced. l Your entitlement to means-tested benefits may be affected. l The home reversion company will buy your home at a discount to its current market value as they are giving you the absolute right to remain in your home for life rent free. l If you pass away soon after taking out the plan, you have effectively sold your property on the cheap. However, some plans have provisions in place so that you are protected. l A home reversion plan cannot usually be reversed, as you are selling part of your home. 16 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 17

10 7. EQUITY RELEASE, YOUR HOME AND INHERITANCE If you do opt for an equity release plan, future house values will play an important role in determining how much equity will remain in your home when you die and so, how much money will be passed on to your beneficiaries. The value of your home as an inheritance will depend upon which scheme you take out a lifetime mortgage or reversion scheme. In the following example we shall assume that the house is valued at 215,000 and that the youngest of the couple involved is 68 years old. If the lifetime mortgage is taken as a lump sum, the couple can obtain an advance of 59,000, with interest accruing at a fixed rate of 6.42 per cent. With the reversion plan, to generate the same sum of 59,000 the couple would have to sell 73.4 per cent ( 157,810) of their home to the reversion company. Then, in both cases, let s assume that the last remaining spouse dies in 17 years time, at which point their home is then sold. Also, that over the 17 years, the home s value has increased by a consistent one per cent a year. THE VALUE OF YOUR HOME AS AN INHERITANCE WILL DEPEND UPON WHICH SCHEME YOU TAKE OUT OUTCOME ONE Taking the lifetime mortgage route, the accrued interest after 17 years will be 110,921. Together with the 59,000 originally borrowed, a total of 169,921 will have to be repaid to the mortgage provider. The home s value, increasing at one per cent a year over the 17 years, will meanwhile have grown to 254,625. This means 84,704 will be left in the form of inheritance once the mortgage has been repaid. OUTCOME TWO The reversion plan route will also see the couple s home worth 254,625 at the end of the 17 years. But as they now own only 26.6 per cent of the home, the amount that can be passed on in the form of an inheritance is 67,730. The reversion plan provider would get a 73.4 per cent share, worth 186,895. So, comparing the two outcomes, OUTCOME ONE results in a bigger inheritance ( 16,974 larger) than OUTCOME TWO. = 215,000 Property value = 254,625 = 215,000 Property value = 254, years later 17 years later EQUITY 156,000 EQUITY 84,704 EQUITY 26.6% EQUITY 67,730 MORTGAGE 59,000 HOUSE PRICE INFLATION OF 1% MORTGAGE (LOAN + ACCUMULATED INTEREST) 169,921 REVERSION 73.4% HOUSE PRICE INFLATION OF 1% REVERSION 186,895 Lifetime mortgage: please note that this is only an example and the value of your house could go down or not increase at the same rate. A good adviser will always ensure that there is a no-negative-equity provision. Reversion plan: please note that this is only an example and the value of your house could go down or not increase at the same rate. A good adviser will always ensure that there is a no-negative-equity provision. 18 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 19

11 IN SUMMARY Of course, future changes in a home s value cannot be predicted, and the home could rise in value by more than one per cent a year, in which case the difference between the inheritances under the two outcomes would be even larger in favour of OUTCOME ONE. Equally, the home s value could fall. In OUTCOME ONE, they would still owe 169,921. The inheritance would then be determined by the home s value. Any amount above 169,921 would be passed on to the estate. If the home s value was below 169,921, the estate would not be required to make up the shortfall between the sale proceeds and the amount they owed if the plan carries a no negative equity guarantee. This means that the amount owed would never be more than the value of the home. MAKING EQUITY RELEASE SAFE FOR YOU The Financial Conduct Authority (FCA) regulates all equity release plans. You can check whether your provider or adviser STATE BENEFITS AND EQUITY RELEASE When claiming State benefits, your household income and any savings will be taken into account. If you are already claiming or think you might be eligible to claim any benefits it is important to be aware that releasing cash from your home could disqualify you inadvertently. firm is regulated by visiting the Financial Conduct Authority s website at org.uk/firms/systems-reporting/register The benefits that could be affected are: l Council tax reduction from your local authority l Employment and Support Allowance l Income Support l Pension Credit l Support for mortgage interest l Universal Credit Judith and Bob Phillips celebrated their golden wedding anniversary in 2013, comfortable in the knowledge that their finances are secure. Bob, 72, a former civil engineer, and Judith, 71, a retired clerical worker, enjoy an active retirement. The couple spend lots of time outdoors and love taking their two dogs, Shelley and Emma, for long country walks. A health scare two years ago, when Bob had a stroke, prompted the couple to reassess life. They decided they wanted to tour round more of Britain in their caravan. But Bob wanted to update his car to a more reliable model for towing and found himself thinking about how they might tap into the wealth built up in their home. The couple have no desire to sell up. They bought a plot of land in Wickersley, South Yorkshire, 30 years ago. They built a three-bedroom bungalow on it, surrounded by a garden they have tended over the years. The house is full of memories. As Bob says: It would take an awful lot to prise us out of it. But the couple had read about equity release, so they decided to contact Key Retirement Solutions to discuss their options. After meeting with a Key adviser, they decided CASE STUDY 8. JUDITH AND BOB S STORY to release 60,000 from their home through a drawdown mortgage with Just Retirement. As well as buying a new Kia Sorento 4x4 car, Judith and Bob also gifted money to each of their two sons. Bob says: The boys helped us build the house, so it is only fair they should share in some of the benefits now. The couple have money left in reserve to make further drawdowns, should the need arise, though there are no plans to access this cash at the moment. Bob says: The equity release is working out exactly as I had hoped. I d do the same again. 20 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 21

12 9. ANSWERING YOUR QUESTIONS ABOUT EQUITY RELEASE YOU SHOULD SERIOUSLY CONSIDER DISCUSSING YOUR PLANS WITH A SPECIALIST ADVISER AND MEMBERS OF YOUR FAMILY proceeds from your plan to pay off the outstanding mortgage first. Q: ARE there any restrictions on what I can do with the money I raise from an equity release plan? A: NO. You can use it for anything you like, but think carefully about how much you need to borrow. Q: WILL I still own my home? A: YES if you take out a lifetime mortgage. But with a reversion scheme, the reversion company will own all or part of the property, although you can live in it for the rest of your life. Q: WILL I be able to move house? A: AGAIN, it depends on the type of plan you choose. Many can be transferred to a new home, as long as the new property provides acceptable security for the plan. But if you are moving to a cheaper property, you may have to repay some of the plan. Below are some of the most common questions asked about equity release. The answers are for guidance only. You should ask your specialist adviser, solicitor and lender or reversion plan company how they apply to you. You should also consider whether there are other questions you need to ask. Q: WHO can take out an equity release scheme? A: GENERALLY, you must meet the following criteria. You must be aged 55 or over; you must own your own home; your home must be worth at least 70,000 and in a good state of repair; you must live in the United Kingdom; and you must not live in a non-standard home, such as a park home, or local authority flats where the majority of the housing is still social housing. Q: CAN I take out an equity release plan if I already have a mortgage? A: USUALLY, yes. But you will have to use the Q: WHAT happens when I die? A: YOUR home will be sold once you and your partner have died. If you have a lifetime mortgage, the sale proceeds will be used to repay the amount you owe and any money left will go to your estate. If you have a reversion scheme, the reversion company will then own all or part of your property. Q: WHAT happens to my partner if I die? A: AS long as the plan is in both of your names, the arrangements will continue with your surviving partner. 22 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 23

13 Q: WHAT happens if my partner or I need long-term care? A: IF one of you needs care in your home, this is not likely to affect the terms of your plan. Similarly, if one of you leaves to go into a care home, the other can continue to live in your property and your plan is not normally affected. However, the plan will normally end if both of you leave to go into a care home. You or your doctor may need to give medical information to the lender or reversion company if this happens. APART FROM SPECIALIST ADVISERS, YOU CAN ALSO GET ADVICE FROM YOUR LOCAL HOME IMPROVEMENT AGENCY, A CITIZENS ADVICE BUREAU OR A LOCAL HOUSING ADVICE CENTRE Q: WHAT happens if the value of my home falls? A: NOTHING. The lender or reversion company takes this risk, as long as you have kept to the terms and conditions of the plan. Q: WHAT about repairs and maintenance? A: YOU will be responsible for all repairs and maintenance. Q: WHAT happens if I don t want the equity release plan any more? A: WITH a lifetime mortgage, you can usually repay the amount you owe at any time but the lender may make an early-repayment charge. But if you sell all or part of your home to a reversion company, reversing it can be difficult; this is because you would have to pay the full market value for the share you originally sold. Q: WILL I be able to raise more cash from my home in the future? A: MAYBE depending on the type of plan you have and whether there is still enough equity remaining in your home. You would need to speak to the lender or reversion company. Q: IS there anyone else I can talk to? A: APART from specialist advisers, you can also get advice from your local home improvement agency, a Citizens Advice Bureau or a local housing advice centre. You can also speak to a solicitor and should think about discussing your plans with your family. Q: WHAT next? A: YOU should seriously consider discussing your plans with a specialist adviser and members of your family. Make sure that you have got all the information you need before making any decisions. 24 THE COMPLETE GUIDE TO EQUITY RELEASE THE COMPLETE GUIDE TO EQUITY RELEASE 25

14 SPEAK TO THE EXPERTS You ve taken your first steps to discovering financial freedom by requesting this exclusive Mail on Sunday guide, sponsored by Key Retirement Solutions. Key are committed to ensuring you have the full story when it comes to unlocking the cash from your home. You can access a wealth of knowledge, experience and expertise by choosing this service. KEY ARE: The UK s number-one independent equity release specialist Committed to offering exclusive deals that are regularly the best on the market Consistent consumer and industry award winners Committed to delivering the highest levels of customer care Dedicated to providing each customer with a personalised, professional service EQUITY RELEASE For impartial information call Key Retirement Solutions on: (We re open Mon-Thurs 9am-7pm and Fri 9am-5.30pm) Or visit This is an equity release plan. To understand the features and risks, ask for a personalised illustration. We ve taken this opportunity to provide you with further services, including annuities, wills and lasting powers of attorney. Pension annuities boost your retirement income Call free on (We re open Mon-Thurs 9am-7pm and Fri 9am-5.30pm) Visit: Wills and lasting power of attorney peace of mind Call free on (We re open Mon-Thurs 9am-7pm and Fri 9am-5.30pm) Visit: