Income from the Equity in your Home

After living in your home for many years and having no mortgage you may not been keen to move to a smaller house. One option is to stay in your home and sell part of the value to a company who will then let you live out your days in the home that you love.

Equity Release Plan

The equity release plan is an agreement that is taken out between yourself and a finance company whereby you will be given an agreed tax free lump sum which will be deducted from the sale of the house if you should ever choose to move or in the event of your death.

Arrangements

Before the money is handed over the company will send a surveyor to check over your property and calculate its value. Your age, gender and state of health will also be taken into account when agreeing on the sum of money that you want from the property. Younger people can borrow more money against their homes than older property owners.

Next of Kin

You should be aware that you will not be able to leave your complete property to your next of kin as the finance company will own part of it. This should be considered before signing any documents if you wish to keep the house in the family. There is nothing to stop your family buying the house from the finance company but it would be at the current valuation.

Sale

Whenever the house is sold the money owed to the finance company must be paid first. This is very similar to anyone having a loan that is tied to the house as that to would have to be paid before a house sale as well.

Schemes

There are now many equity release schemes on the market as the number of home owners has grown over the years. With property values rising all the time it is a popular way to enjoy your money in later life.

Advice

Before signing any agreement concerning your home make sure that you take advice. Your bank will be able to supply information or even offer other ways of raising funds. For the older person Age concern can supply advice and literature on this subject. Speak to friends family and colleagues, they may have well undertaken this option themselves and can advice you of any pitfalls that may have befallen them during the agreement.

Things to Consider

Before making any form of agreement you should consider certain points.

• If you have a partner that is younger than yourself will he or she be able to live in the house after your death? This also relates to anyone else who lives in your home with you.
• Will the money be paid to you in one lump sum or can you have a monthly payment?
• What is our age? Owners between the ages of 55 – 70 will benefit most from equity release.
• You may be able to obtain age and income related benefits that will enable you to live in your home without considering an equity release scheme. Age Concern can advise you on this point.

It is always advisable to obtain legal and financial advice before undertaking an equity release agreement.