If you own your own home you will be pleased to hear that you have never had it so good. It’s fine to say that you are wealthy on paper but how do you access this wealth if you want to build an extension or pay for a family holiday without sell up?
So how do you access the cash?
There are four key ways to do this-
- A separate second mortgage
- Sell your home and buy or rent something cheaper
- Equity release
These choices may be limited by your age, financial income and the amount you wish to borrow.
Which is the best option for you?
This is where taking Independent Financial Advice is key. One of our experienced Independent Financial Planners will be able to help you.
So let have a look at the options in more detail.
Many borrowers choose to remortgage (switch their current mortgage for a new deal, either with their existing lender or a new lender) every few years in order to take advantage of new rates, mortgage offers or to fit a change in circumstances. The market is very competitive. At the same time, you could look to increase your borrowing.
A rise in your property’s value or an increased income may mean you could increase your mortgage to help pay for major outgoings such as a wedding or your child’s university costs, rather than borrowing separately, and in some cases more expensively, from other sources.
Raising money in this matter needs to be taken only when you understand the full costs. This is where your financial adviser will be able to highlight these to you.
The remortgage section on our website will provide you with the current remortgage rates as an indication of the cost. It’s a great place to start your research.
As the name implies this is an addition mortgage which sits behind your existing mortgage. Second mortgages can be useful if you have an exceptionally good interest rate on your first mortgage or if the penalties for breaking this contact are expensive.
From my experience, this market has become more competitive over recent years. This means that the interest rate and fees have become more attractive. Again, this type of borrowing should not be entered into without you fully understanding the costs and your responsibilities. This is where our financial advisers can help you.
Downsizing to a smaller house.
In the past, this has been a popular option for people nearing retirement. When you take into account the cost of moving this is not always the best choice. Taking into account, stamp duty, estate agents fees, conveyancing and removal cost this can quickly add up to many thousands. Also, you might not want to move away from friends and your home might hold special memories. Again our financial advisers will be able to give you an indication of costs.
Move into rented accommodation
After paying your selling fees you would have freed up some equity. But you will now have to budget for the rent. Admittedly, you will save on maintenance bills but will lose out to long-term security. You will have no guarantees from your landlord on future rent rates. You will also need to ensure that your income will keep up with inflation.
Our advisers will be able to help you with this.
Equity release schemes.
If you are over 55 years old this may be an option. We are members of the Equity Release Council and recent figures released by them show that over 67,000 equity release mortgages were agreed in 2017.
Equity release is designed for individuals aged 55 and over to release money from the property they live in without having to make any regular repayments. There are two types of equity release; Lifetime Mortgages and Home Reversion plans. The Financial Conduct Authority regulates both. Using an equity release product allows you to draw a lump sum or regular smaller sums from the value of your property while remaining in your home.
Equity release can play a role in retirement funding and the money can be spent on anything you like. Check out our website to find out more. Again this type of borrowing should not be entered into without you fully understanding the implications. Equity release is a long-term commitment and not right for everyone. Most of all, our financial advisers are here to help you.
How Anstee & Co can help you release equity from your home.
In conclusion, if you would like to find out more then why not arrange a free initial meeting with one of our independent financial advisers.
We have offices in
- Kettering, Northamptonshire
- Stamford, Lincolnshire
- Birmingham, West Midlands
- London, Central London.
Our financial planners also make use of meeting rooms in Towcester, Northampton, Bedford, Droitwich, Warwick and Wellingborough.
You can arrange a meeting at your home and at a time that is convenient for you.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. Equity released from your home will be secured against it.