More and more people over the age of fifty-five, are using their home as a cash machine as interest rates continue to fall on Equity Release plans. The rates have tumbled from around 8% four years ago, to fixed rates below 3% today.
How can you turn your home into a cash machine?
According to the Equity Release Council, of which Anstee & Co are members, these type of Equity Release plans are the fastest growing on the market. Equity Release mortgages allow homeowners to take money out of their property tax-free.
The Equity Release Council feel that demand is coming from a new type of affluent client. This client sees this as the route to tax savings and inheritance planning.
If you have a sizable pension pot and equity in your home, you could be advised to leave your pension fund untouched until just before you reach the age of 75. Why 75?
If you die before age 75
So, if you die before the age of 75, your untouched pension pots can pass tax-free to any nominated beneficiary provided the money is paid out within two years of the provider becoming aware of your death.
If you die after 75
So, on the other hand, if you die after the age of 75 and your nominated beneficiary takes the money as income or as a lump sum payment, they will pay tax at their appropriate rate or rates. In practice, this means that the money will be added to their income and taxed in the normal way.
Instead, you could take out an Equity Release plan to live on. As you can see, this needs careful financial planning.
Equity Release plans have now become more flexible over the years. So, with over 100 deals available, the market is very competitive. Equity Release plans normally compound the interest until the loan is repaid when you pass away or move into long-term care. However, some plans provide the option to cover the interest in monthly instalments, so saving on the compound interest.
The reasons for releasing money this way are many. Some wish to help children and grandchildren get on to the housing ladder, others to plug a gap in their retirement income or pay off credit card debt or an outstanding mortgage.
Equity Release could be the answer for interest-only mortgage borrowers.
Consumer groups have been concerned with a large number of people with interest-only mortgages, who have no way to repay their mortgage. Some who have built up enough equity in their home may choose equity release, rather than downsizing and having to move to an area away from their friends and family.
Peter Anstee, Business Development Manager said-
“We have a team of award-winning advisers that specialise in the borrowing issues faced in later life. Releasing equity from your home might not be right for everyone. However, it is becoming an option that is worth considering in more and more circumstances. Especially now as the interest rates are looking more attractive.”
To find out more watch this short video
How Anstee & Co can help you turn your house into a cash machine.
We are a firm of Independent Financial Advisers (IFA’s). This means that the advice we offer is unbiased. We will look at all the financial options that are open to you, not just Equity Release. Our Financial Advisers will review the “whole of market” and do not work from a limited panel like some firms.
Please contact us today to find out more. The initial “getting to know you” meeting is at our cost and without obligation. Only if you choose to proceed with our recommendation would a fee of £895.00 be payable. You have an option to instruct your solicitor to pay this fee to us from the funds released. The meeting can be arranged at a time that is convenient for you. We will always recommend that you involve your family in what you are doing, so if you would like them to attend the meeting as well, that is fine. We can come to your home or you can come to one of our offices located at-
- Kettering, Northamptonshire
- Stamford, Lincolnshire
- London, Pall Mall, Greater London
Additionally, our financial planners live and make use of meeting rooms in: –
- Bedford, Bedfordshire
- Market Harborough, Leicestershire
- Northampton, Towcester, Brackley and Wellingborough in Northampton.
Finally, the information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone.
These products are lifetime mortgages or home reversion plans. Equity released from your home will be secured against it.