Article

HAVE YOU ALREADY RELEASED EQUITY FROM YOUR HOME?
- June 2009

By Helen Kanolik - (PFM Associates Ltd)

Address: Sir Peter Thompson House, 25 Market Close, Poole,
Dorset, BH15 1NE
Telephone: 01202 673 456
Fax: 01202 672 122
E-mail: helenkanolik@pfmassociates.co.uk
Visit our Web Site: www.helenkifa.co.uk

The most popular way to release equity from a property is a 'Lifetime Mortgage', where you borrow money against the value of your home. You do not pay any interest as it rolls up until the property is sold - normally if you go into care, or on your death. If you did pay interest, your monthly outgoings would increase.

It is estimated that 10,000 people who have taken out these mortgages could re-mortgage now and reduce the amount owing when the property is sold. This is because interest rates have fallen: 7-9 years ago, the interest rate was typically 7.5%-8.25% p.a., and now it is about 6%-6.5%.

The effect of re-mortgaging could be that your family inherits more money, and you might also be able to release more equity now to supplement your pensions.

I recently took the case of a couple aged 72 and 70 who had borrowed £46,000 from Northern Rock in January 2002 at a rate of 7.59%. (sentence deleted so clients won't identify themselves) My calculations showed that re-mortgaging to a rate of 6.5% could save nearly £16,000 if they stayed in the house for a further 10 years - after allowing for the costs of re-mortgaging.

The process was quite simple and took less than 6 weeks in total.

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

I only recommend companies which are part of the Safe Home Income Plan (SHIP) scheme. They offer a 'no negative equity' guarantee, so the amount you owe can never exceed the property's value. In addition, you have the right to live in your home for as long as you wish, and to transfer the mortgage if you move house (with certain conditions).

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

I am normally paid for this advice and work by the lender, but may charge a fee if the amount paid by the lender is below a minimum amount, currently £500.

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