In recent years the housing market within the United Kingdom (and Scotland in particular) has experienced dramatic growth, meaning that many home owners now have a significant amount of equity or value tied up in their home.
Unfortunately, many home owners, particularly those in retirement, find their income is becoming increasingly inadequate in keeping up with the rising cost of living. Their retirement income no longer allows them to replace the family car or take off on a nice foreign holiday like they used to do when working and earning a salary.
To bridge that financial gap and achieve their financial objectives they are now turning to the possibility of releasing some of the value in their homes. They are essentially ‘asset’ rich and ‘cash’ poor..
The clients can take this money in a large lump sum or a smaller lump sum with a reserve or draw-down facility which can be used when needed anytime in the future.
The Lifetime Mortgage is repaid when the homeowner dies or moves into a care home with little prospect of returning home. The beneficiaries of the homeowner’s estate, in most cases their children and grandchildren, can then sell the property and repay the lender the sum borrowed plus any interest accrued over the period. Any surplus left over is shared among the designated beneficiaries.
Some of the Equity Release Frequently Asked Questions posed by clients and our corresponding responses are shown below.