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SHOULD YOU BE AFRAID TO RELEASE EQUITY FROM YOUR HOME?
- May 2008

By Helen Kanolik - (Heliting Financial Services Ltd)

Address: Beacon House, 15 Christchurch Road, Bournemouth,
Dorset, BH1 3LB
Telephone: 01202 551 664
Fax: 01202 405 483
E-mail: helenkanolik@heliting.com
Visit our Web Site: www.helenkifa.co.uk

What can you do if you are retired, and don't have enough income each month, or enough in the way of savings you can draw on, but you live in a property which you own?
The options are limited:

  • You could sell the property, and move to rented accommodation, so that you can spend the money from the property sale.
  • You could move to a cheaper property, and spend the difference.
  • You can stay where you are, and release equity from your property.
(I do not recommend any other ways of raising money, such as personal loans and credit cards, as they are expensive and you need to be able to repay them, or you could become bankrupt.)
If you do not want to move house, you should consider finding out more about Equity Release. It can work very well for many people, but it will not be appropriate for everyone.

You need to be fully aware of the facts before you make any decisions and this is where, as a fully qualified Independent Financial Adviser, I can help you make the right decision according to your particular needs and circumstances.

There are two ways of releasing equity. The first is a ‘Lifetime Mortgage’, where you borrow money against the value of your home. You do not pay any interest (which would increase your monthly outgoings), as it rolls up until the property is sold. This would normally happen if you go into care, or on your death.

The second method is called ‘Home Reversion’. You sell part or all of your property to a company, and the company gives you the right to live there as long as you wish. You get some cash at the beginning, and more when the property is sold (unless you sold all of it to the company at the start).

If you take a Lifetime Mortgage, there is usually a ‘no negative equity’ guarantee, so the amount you owe can never exceed the property’s value. With a Home Reversion, the company is taking the risk of a loss if home values fall.

I will be holding a free seminar to explain the pros and cons of Equity Release, at the Allendale Centre, Wimborne, on Wednesday, 18 June at 2.30pm. Solicitors WB Legal will also be taking part, along with guests from Prudential and from Partnership Assurance.

If you would like to come, email me at helenkanolik@heliting.com, or call 01202 551664.

Heliting Financial Services is authorised and regulated by the Financial Services Authority(FSA) and entered on the FSA Register no. 191598
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