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Equity release is a popular way for retirees to access the value of their home and provide themselves with a lump sum of cash. It is a financial product that enables homeowners aged 55 and over to unlock the capital and tax-free cash from their property without having to move. If you are considering a lump sum equity release plan, use Proper Finance to get the best rates you can.
What Is a Lump Sum Equity Release Plan?
Lump sum equity release is a financial product that allows you to access the equity in your home and receive a lump sum payment in return. The loan is secured against the value of your property and is usually repaid when you sell your home or move into long-term care.
Lump sum equity release plans give you all your money in one lump sum, unlike drawback equity release plans which allow you to take your money out bit by bit.
What Are the Advantages of Lump Sum Equity Release Plans?
You can borrow as much as you want as a one-time, one-off payment, and you can spend the money you release tax-free. The interest rate is also competitive and fixed for life, and there is the option of making monthly repayments. Any interest accrued will also be paid off when your home is sold.
Your home continues to be yours as long as you live there. When you pass away or move to long term care, the house is then sold and your debts are entirely paid off. There are also many plans that offer protection for if you want to downsize after a set number of years.
What Are the Disadvantages of Lump Sum Equity Release Plans?
The compound interest on your equity release will build up. This means the amount you repay when you pass or move into long term care will be higher if you do not pay your interest off. This will reduce the amount of inheritance your beneficiaries will receive.
If you claim for means-tested benefits, you may not be able to continue receiving them if you take out a lump sum lifetime mortgage. It could take you over the benefits threshold. This means that if you claim for means-tested benefits, you should consider a drawback lifetime mortgage.
What Is the Difference Between Lump Sum and Drawback Equity Release?
Lump sum equity release is a type of financial product that allows you to access a lump sum of money from the value of your home, whereas drawback equity release is a type of financial product that allows you to access a periodic income from the value of your home. The income from both is typically a percentage of the value of your home.
Do I Qualify For A Lump Sum Lifetime Mortgage?
To be eligible for this mortgage, you must be 55 or older (90 maximum). The property you want to use should be in the UK, and worth at least £70,000.
Is A Lump Sum Lifetime Mortgage Right For You?
A Lifetime Mortgage Lump Sum is ideal for people over 55 who are looking to release a cash amount from their property. This cash can be used to pay for a specific expense such as home improvements, holidays, or to pay off existing mortgages.
How Much Do You Pay Back on a Lifetime Mortgage?
Usually after a year you will have the option to start making monthly repayments on a lifetime mortgage. There will be a maximum yearly amount that you can repay – often 10% of the initial amount you borrowed.
What Are the Tax Implications of Lump Sum Equity Release?
The tax implications of lump sum equity release can vary depending on your individual circumstances. If you are over 55 and live in the UK, there may be some tax advantages associated with releasing equity from your home. However, it is always advisable to speak to a qualified financial advisor to discuss your specific situation and to ensure you are aware of the tax implications of releasing equity.
Where Can I Get A Lump Sum Equity Release in the UK?
There are several providers of lump sum equity release plans in the UK, including Aviva, Age Co, and More2Life. However, you can access the most competitive deals if you search through Proper Finance.