Releasing Cash from your Home
Some people find that they don’t have enough capital or income in retirement. Most of their money is tied up in their homes, and they don‘t want to move. Their only options may be to borrow against the value of the house or flat, or to sell some or all of it.
Equity release plans had a bad reputation in the 1980s, but they are now tightly regulated, and more flexible. They don’t come cheap, partly because the borrowing is for an indefinite period. This is a specialised area for financial advice.
I only recommend equity release from companies which follow the Safe Home Income Plan (SHIP) Code of Practice. You should ask yourself the following questions (the SHIP Safety Checklist):
Do I have the right to live in my property for life?
Do I have freedom to move to suitable alternative property without financial penalties?
Will I receive either a cash sum or regular income payments?
The other way of releasing equity to sell all or part of your home (‘Home Reversion’), which is less popular than borrowing, but can allow you to release a larger amount.
Whenever possible, the family should be involved in the decision.
Read my comments about equity release re-mortgaging in the Mail on Sunday on 1 February 2009.
I do not normally charge a fee for this type of advice. If your circumstances are such that I might do several hours' work for you without recompense, I will discuss fees with you before starting the work. For example, if I provide you with a written recommendation and you then decide not to proceed, a fee of £500 may be payable.
This may be a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.
Equity Release lowers the value of an individual's estate. Consider other options before you undertake such an arrangement.
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