Taking independent advice from an equity release specialist is increasingly important,as there are now 201 different products to choose from. This is a five-fold rise in the last five years, as choice hits a new high,according to figures from MoneyFacts.co.uk and finance expert Rachel Springall. “Lenders have expanded their product ranges vigorously in response to consumer demand for greater choice.The rate of interest you pay has also fallen, with the average lifetime mortgage charging 5.24 percent, although you can get fixed rates from as little as 3.55 per cent.''
Most people choose to fix their interest rate for life,to protect their estate against future rate increases. The money rolls up and could be a substantial sum by the time you die and your property is finally sold, depleting your inheritance.However, as prices continue to rise so will the value of your home, so you may still have plenty of equity left. Springall said interest charges are not the only cost, with eight out of 10 deals charging a product fee.
You may also have to pay a fee to your adviser, typically around £1,500. Your adviser should clearly explain all the fees and charges you will pay in advance, and addresany concerns you may have. Watch out for early redemption penalties, as some may charge 10 per cent of your advance if you withdraw in the first five years.
Although the housing market has slowed, prices have remained remarkably resilient amid current Brexit uncertainty. This is a real boon for older homeowners, who have seen the value of their homes increase by nearly £1,000 a month over the past six months,according to an analysis from Key. Total property wealth owned by over-65s who are mortgage-free is at a new record high of almost £1.12 trillion. Key’s chief executive Will Hale said these figures demonstrate the long-term investment success of home ownership and the value of housing wealth for retirement. “Many over-65s will have considerable property wealth, which can transform their standard of living in retirement and help family members.” He said equity release is not right for everyone but if your home is your largest asset in retirement, you should take some time to think through when and if you might need to access this wealth.
Deborah Stone, founder of MatureThinking.co.uk,which advises companies on products and services for older people, said the process should be overseen by solicitors to confirm your suitability. “There are many different plans and options, so it is vital you take independent financial advice, so that a qualified adviser can look at your situation to see if equity release is right for you or whether there are better alternatives.''