Raising Money from your home-Equity Release-Home Income Plans

These schemes are covered by the lifetime mortgage regulations and are regulated by the FSA. There is a link to their site and fact shheet at the bottom of this page. The FSA web site has information guidance should be sought from an Independent Financial Adviser who specialises in this area.

Afetr reading this page you should also read the article by David Wright which explains Equity Release in more detail.

Equity release schemes or Home Income Plans can be helpful in certain circumstances but are not suitable for everyone. For example, they can be expensive and inflexible if your circumstances change in the future (if you want to move home, for example) and may affect your current or future entitlement to State benefits. It is important that you check all the other ways you could meet your financial needs before making any commitment.

The main condition relates to your age-different companies offering these schemes have different minimum ages.

The qualifying age for some schemes is 55. However many advisers would say that at age 55 these will probably offer poor value. Most schemes require that you are older - 65 or even 70.

You will need to own your own home. Preferably with no or very little mortgage outstanding.

Some schemes are only able to accept certain property types-some will exclude flats.

Freehold properties will normally be acceptable, and leasehold properties will need a minimum of 70/80 years left on the lease.

Your property may have to be worth a minimum amount-This can vary but it is unlikely that a property valued at less than £80,000 would be acceptable to scheme providers.

The property will also need to be in a reasonable condition.

Reversion Schemes
These are based on you selling all or part of your home.

Mortgage schemes
You are raising a loan against the value of your home.

Lifetime mortgages
In this type of scheme you borrow money from a lender, and give this lender a mortgage over your home.

All of these schemes mean you losing some or all control of what is likely to be your main asset, your home. Any scheme will effect the value of your estate and what you will leave after your death for your beneficiaries.

You MUST take both legal and financial advice before entering into any arrangement.

As well as the guidelines from the FSA you can find other information from:
Help the Aged:
http://www.helptheaged.org.uk/en-gb/AdviceSupport/FinancialAdvice/
Safe Home Income Plans:
http://www.ship-ltd.org/
Age Concern:
http://www.ageconcern.org.uk/

There are different names for the different types of Equity Release schemes:

• Rolled-up interest loan
• Home reversion scheme
• Home income plan.

The FSA factsheet covers such questions as:

• What is equity release?
• How does equity release work?
• Who would my home belong to?

Please download the file here.

The fact sheet is in PDF format and you will need the FREE PDF reader from Adobe to open it. You can obtain the Free reader by clicking on the image below.

Finally you can Google for Home Income Plans by clicking on the button below for more information and reading.