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Equity Release Schemes
Equity Release Schemes are becoming increasingly important as we live longer, face falling pension annuities and lower returns on our savings, making for a financially challenging retirement.
Equity Release Schemes are aimed at allowing homeowners who have retired or are contemplating retirement to release lump sums of equity (capital) to supplement their income. One appeal is that the homeowner is allowed to remain in their home and such a scheme may reduce Inheritance Tax liabilities.
How Do These Schemes Operate?
There are two principal types of scheme. One is known as a Lifetime Mortgage, the other is known as a Home Reversion Plan.
Lifetime Mortgages
By mortgaging your home for your lifetime or until you permanently vacate your home, you release capital lump sums, an annuity (annual payment) or a combination of the two.
Home Revision Plans
For these plans, you sell part or all of your property to the scheme provider in exchange for either a lump sum or an income, together with a right to continue to live in your property for the rest of your life.
Regardless of which scheme you enter into, in general the sum of money you receive will be considerably less than the market value of the percentage you sell to the scheme provider. This is because the scheme provider will have to wait some years before any money is repaid.
How We Can Help You
Entering into any Equity Release Scheme may result in the loss of means tested benefits and will reduce the value of your estate. It is important that before you enter into any scheme, you discuss the proposal fully with your family.
Every year, Brewer Harding & Rowe act for individuals and couples who are considering entering into an Equity Release Scheme. We provide detailed advice, guidance and support tailored to your individual needs.
On occasion, there may be alternatives to Equity Release Schemes that are available to you. When these are available, we can discuss these with you and help you arrive at the right decision.
