Considering the impact of house prices If you’re considering equity release, it’s important to consider the value of your home now and in the future, as it will affect any potential inheritance you want to pass on.
Is equity release safe? Yes, all our equity release advisers have specialist qualifications and you can only take out equity release if you’ve received advice from a qualified adviser. It’s important you get that support to help you make the right choice.
Over the last few decades, average UK house prices have risen steeply; more than doubling in the last 20 years. If you take a lifetime mortgage and house prices continue to rise, you may build up more equity to leave to your loved ones, as the plan continues over time. Please remember that compound interest will continue to accrue over the term of the plan.
However, it’s also important to understand that house prices may fall during the life of your plan, which would reduce the amount of inheritance remaining. But we can recommend a lifetime mortgage where you never owe more than your home’s worth or pass on any equity release related debt to your loved ones. There’s more information available about the no negative equity guarantee, and others, on page 25.
As an extra safeguard, we’re a member of the Equity Release Council (ERC) and recommend lifetime mortgages that meet ERC standards.
Equity Release Council guarantees
We recommend lifetime mortgages that meet Equity Release Council standards and come with the following guarantees: Stay in your house You'll retain full ownership of your home and can stay in it for as long as you wish You can still move home You have the right to move home in the future, subject to criteria No negative equity guarantee You'll never owe more than your home's worth or pass on any equity release related debt to your family, provided terms and conditions are met Fixed interest rate Your interest rate is fixed for the life of your loan, so you’re protected against any future rate rises Flexible payment options There are typically no monthly repayments to make with a lifetime mortgage, but you have the right to make voluntary payments without incurring an early repayment charge, subject to lending criteria. Things to consider It’s important to remember that a lifetime mortgage may leave you with limited or no property equity remaining and will reduce your financial options in the future.
DAY ONE
AFTER 15 YEARS
Lifetime mortgage
Lifetime mortgage + interest
— £197,888
Equity remaining in your home
— £281,616
Equity remaining in your home
— £223,914
Lifetime mortgage plus interest
— £81,703
Lifetime mortgage
Property value £363,319
Property value £421,802
Lifetime mortgages are loans secured against your home and are subject to compound interest, meaning the amount you owe can grow quickly.
This example assumes a fixed interest rate of 6.74% MER (Monthly Equivalent Rate) and house price inflation of 1%. Please note that these are only examples and the value of your house could go down or not increase at the same rate. Lifetime mortgage amount and property value are based on the average values in Q1 Key Market Monitor 2023. House price growth can help build further equity in your property which can be passed on as an inheritance or accessed again in the future through equity release.
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