Usually, the amount you can release is linked to your age; the older you are the greater the cash sum that can be released. Most providers will release a fixed percentage based on your age. For example a 60-year-old could release 20%, a 65-year–old could release 25%, and so on. The amount available varies between providers. The amount you can borrow also depends on the value of your property, your age, and sometimes your health. New mortgage rules mean any lifetime mortgage applications will be assessed based on whether you can afford to repay the loan.
The amount of inheritance available will be the difference between the proceeds from the sale of the house and the amount outstanding on the plan when it’s redeemed. However as property prices rise and fall, we can't predict the future value of your property when it's eventually sold, so we can’t predict what inheritance will be available. If your plan has a lifetime fixed interest rate, you'll have the certainty of knowing exactly what your future liability will be. Some providers offer an inheritance protection facility which allow clients to protect a specific percentage of the property’s future value. Your advisor will discuss this option if protecting an inheritance is one of your priorities.
There are four main costs associated with equity release. 1. Advice fee At StepChange Financial Solutions we don't charge any advice fees. 2. Valuation fee This is payable when you submit your application and usually depends on the estimated value of your property. 3. Legal fee We recommend that you agree a fixed fee with your solicitor once your equity release offer is confirmed. Typical legal fees range between £400 and £500. If you’re purchasing a property, or the legal position of your property is not straightforward, additional costs may apply. 4. Application fee Some lenders may charge an application fee. Where this is the case it typically costs £695.
All plans that meet the standards of the Equity Release Council: guarantee lifetime tenancy in your property, regardless of what happens to future interest rates, property values or investments can be transferred to a new property, subject to the approval of the plan provider, and carry a ‘no negative equity’ guarantee meaning the amount owed can never exceed the value of the property. Providing you maintain your home to a reasonable standard and fulfil the terms of the agreement.