With government restrictions placed on moving house during lockdown and many people facing uncertain financial times, you may be wondering whether now is a good time to seek additional funds by releasing equity in your home – and if indeed, it is still possible.
Toni Chalmers-Smith, Equity Release Council member and later life lending specialist, explains how things are very much business as usual in the equity release market and outlines the steps that have been taken to ensure that transactions can still progress smoothly.
- How are lenders adapting to the current situation?
- Is now a good time to consider releasing equity?
- How does equity release work?
- Is releasing equity right for me?
- What can the money be used for?
- The Tees difference: a bespoke service focussed on delivering what you really need
- Expert financial and legal advice all under one roof
Most lenders remain open and fully functional, with processes working as normal through online portal and applications systems.
Normally lenders will instruct a surveyor to visit your home to provide an estimation of the value of your property and advise whether any work is needed.
Currently, lenders are offering desktop valuation surveys meaning that home valuation visits are not required and loan requests can proceed without delay.
Face to face legal requirements have also been adapted and relaxed in line with a recent announcement from the Equity Release Council to enable business flow, allowing cases to progress to completion.
Equity release was gaining rapidly in popularity before the pandemic, offering many people the opportunity to unlock the value in their homes to provide extra funds without having to sell their property.
Common reasons for releasing equity include making home improvements, going on a special holiday, helping a family member onto the housing ladder, or simply providing additional income for a more comfortable retirement.
Under the current situation, you may be thinking about equity release as an option if the pandemic is having a negative impact on your finances or those of a friend or family member who you would like to support. Alternatively, the crisis may have prompted you to re-evaluate your priorities in life and you may now be making financial plans and projects for when life returns to ‘normal’.
Whatever your situation, we are here to guide you on the best options available to you.
Equity release is essentially like a long term loan. However, you don’t have to make monthly payments, unless you choose to, and the loan is usually repaid when the last borrower moves into long term care or dies and you keep full ownership of the property. The maximum loan amount depends on your age and how much your property is worth.
Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.
Retirement Interest Only (RIO) Mortgage
A retirement interest only mortgage is very similar to a standard interest only mortgage, but with some differences.
The main part of the loan (capital) is usually only paid off when the last borrower moves into long term care or dies and you only have to prove you can afford the monthly interest payments.
Retirement Capital & Interest (RCI) Mortgage
Much like a standard repayment mortgage you pay back both interest and capital on a monthly basis.
The main difference is that you can borrow up to a higher age than on a standard mortgage but the product is still designed to repay your mortgage in full by the end of your term.
You’ll need to be able to afford the repayments on a monthly basis.
Home Reversion Plan
A Home Reversion Plan allows you to access all or part of the value of your property while retaining the right to remain in your property, rent free, for the rest of your life.
The plan provider will purchase all or part of your house taking into account your age and your health and will provide you with a tax free cash lump sum (or regular payments) and a lifetime lease, guaranteeing you the right to stay in your property rent-free for the rest of your life.
It’s often a good idea to speak with family members or trusted friends before taking on further borrowing as they can often offer support and suggest other ways you could raise money. Releasing equity can have an impact on inheritance amounts you leave and any state benefits or local authority grants you get.
The money released can be used for lots of different things. Some common uses include: home improvements, family gifts, buying a car, travelling abroad or funding care.
Toni Chalmers-Smith is a later life lending specialist at Tees who has worked in the financial services industry for over 25 years. While fully qualified in all forms of life, health, mortgage and pension business, Toni is expert in advising clients who require later years advice, which includes investments, inheritance tax and estate planning, equity release and care fees planning.
Toni works closely with Tees’ legal advisers in providing specialist advice on all areas of later life lending and also offers older clients a financial review and support service, especially if an individual or family member is unable to cope with day to day financial decisions.
Catherine Banks is an experienced solicitor in Tees’ residential conveyancing team, and specialises in later life lending conveyancing. Together Toni, Catherine and the rest of the Tees team work seamlessly together to ensure that the solutions they provide truly fulfil your needs, and are fully tailored to your individual circumstances.
Toni and Catherine pride themselves on offering a friendly, personal service which is designed to put you at ease and support you in these important financial decisions. Their approach is highly ethical; when dealing with older clients where there may be a vulnerability concern Toni can offer an advisory service and where necessary, work with a Power of Attorney and/or make an application to the Court of Protection on your behalf.
There are many advantages of having your financial advice and legal conveyancing services all under one roof:
- a fast, efficient, joined-up service that is second to none
- transparency in terms of our fees and any associated costs
- a fully comprehensive service that is highly cost-effective
We at Tees strongly believe that financial and legal advice should take you to the stage where you can make clear and informed decisions, happy in the knowledge that you have received all the information and choices needed to reach those decisions.
Toni is a SOLLA Accredited Adviser and operates under its strict code of conduct. Both Toni and Catherine are members of the Equity Release Council
Only specialist advisers can offer equity release advice and are based in:
Chat to the Author, Toni Chalmers-Smith
Wealth Specialist, Wealth management, Bishop's Stortford officeMeet Toni
- Areas of expertise
Tees supported me in my role as attorney for my elderly mother-in-law in obtaining release of capital from her house to fund her care, enabling her to continue to live in her own home. This was a protracted process requiring an application to the Court of Protection as well as advice on the equity release market and the conveyancing aspects of the transaction. Tees’ multi-disciplinary expertise meant I could find all the help I needed from the one company: Toni Chalmers-Smith as wealth specialist, Francis Gill with the Court of Protection and Catherine Banks on the conveyancing. A great team!
Mr Lawrance Lucas
I'm very grateful for the professional service that everyone at Tees has shown me: Cathy Izzard who drew up my late mother’s Will and obtained probate; Toni Chalmers-Smith for care fees planning and Allan Wright for the conveyancing. They're knowledgeable, approachable and have empathy.
Mrs Mary Pope
Toni Chalmers-Smith and her colleagues define "where there's a will there's a way". Toni demonstrated tenacity, drive and an ability to think round problems and find solutions to deliver a result. Toni and the team at Tees are a must for anyone considering financial advice.