Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Inheritance Protection

Most plans will allow you to protect or ringfence part of the value of your home for your beneficiaries. You can decide how much-guaranteed value you want to leave and no matter what happens to house values, your beneficiaries will get that percentage of the sale proceeds.

However, there’s a downside. For example, your home’s worth £200,000 and you want to guarantee 40 per cent of the sale proceeds for beneficiaries, today’s value, £80,000. Therefore, the lender can only work with the balance, £120,000. If the maximum loan to value (LTV) you can have at your age is say 35 per cent, you could borrow a maximum of £42,000 today. Without the Inheritance Protection, the maximum available could be £70,000.

If you’re not looking to take the maximum available, this might not be an issue. However, because of the lower overall amount the lender can provide, they might charge a higher rate of interest from the outset. In fairness, most customers say they would be happy for their beneficiaries to take whatever’s left on the final sale of the property. Indeed, when you consider a major use of Equity Release is for gifting to family, this isn’t unreasonable as they benefit from an early inheritance.

Again, lenders tend to use their own calculations for this so please check the details in your personal Illustration KFI document where all the details terms and conditions can be found.