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Equity Release in Wirral

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Equity Release in Wirral

Why should you consider equity release in Wirral?

If you live in the Wirral, you will be well aware that it is gradually becoming more and more difficult for homeowners to find a property that meets their needs and is affordable.

From 2019 to 2020, average property prices in this area rose by 11.1% (1).

While this is bad news for first-time buyers, it could be great for people aged 55 or over. This is because they are more likely to own a property already, and as it increases in value, their assets improve.

If you are in this situation, equity release in Wirral may be an option for you, and it is something you shouldn’t delay as you could be benefitting from an equity loan in a matter of months.

Please call our 24-Hour Helpline: 0330 058 1579

Why Should I Consider Equity Release in Wirral?

The most obvious reason to consider equity release in Wirral is that you could increase your income without needing to take on extra work.

Perhaps you are already working full-time and you are concerned that your pension won’t be sufficient in retirement, but you do not have the time or energy for a side hustle.

Maybe you have already retired and are struggling to make ends meet without your employment income, but you cannot face the thought of going back to work.

Whatever your individual circumstances are, you could use equity release in Wirral as a way to gain more money without having to change your circumstances a significant amount.

You don’t have to work more hours, you don’t have to move home, and you don’t have to budget a ridiculous amount to the point that you are unable to enjoy your life.

Another reason to consider equity release in Wirral is that it isn’t difficult to qualify for it. If you are over 55 years old and you are a homeowner, there is a good chance that you would qualify for equity release.

Your property must be worth £70,000, and this is confirmed through a property valuation once you have signed up to the scheme.

There is no repayment with equity release, which is a huge benefit for homeowners. Though it is possible to make repayments on certain plans, it is not expected, and this means you don’t have to worry about having enough income to pay back the money. In this sense, equity release in Wirral is very flexible.

If you want to purchase a second home but you aren’t confident that you have the funds to do so, equity release may give you the boost you need to achieve this. You could select a second home plan and use your loan to purchase a home that you can use as a holiday home for your family or as a second home.

Please call our 24-Hour Helpline: 0330 058 1579

Is There Any Reason I Should Avoid Equity Release in Wirral?

There are some reasons you may want to avoid equity release in Wirral, so if any of the following factors apply to you, do some more research before opting for equity release to be sure that it is going to help you rather than harm you.

Firstly, are you sure that you would be able to afford equity release? There are fees that are involved in the application process, and it’s better to budget for them now rather than later.

It’s also important to consider whether you can ‘afford’ to leave less money to your family, as equity release does tend to reduce the amount of money you can leave to them.

Secondly, is it possible for you to earn an income in a less risky way first and see if it’s sustainable?

We will outline some of the possible alternatives to equity release later on, but to name a few, could you re-mortgage your property, downsize, or access grants from the government before taking out an equity release loan in Wirral?

Finally, do you imagine that you will not want to commit to a lifelong scheme? Equity release in Wirral requires total commitment, as the scheme will not end until you either go into long-term care or pass away.

If you do want to end it early, you may have to pay an early repayment fee of up to 25% of your loan.

Please call our 24-Hour Helpline: 0330 058 1579

What Happens If I Want to Release Equity and My Partner Doesn’t?

This is a tricky position to be in, as releasing equity does affect your finances significantly. We would recommend taking a step back and considering alternatives if you and your partner cannot agree on taking out equity in Wirral.

If your partner is hesitant about equity release because they are buying into common myths, we recommend reading our article where we bust some of these myths, as it gives a realistic portrayal of equity release.

It is not specific to the Wirral, but each point will apply to homeowners in the Wirral.

If your partner is unable to take out equity in Wirral but wants to, you could arrange to take out an individual loan in your own name for now, and that way you would both benefit from equity release without taking out a joint mortgage.

Please call our 24-Hour Helpline: 0330 058 1579

Equity Release in Wirral: Home Reversion Plan

If you are interested in equity release in Wirral, you will need to be aware of the different plans you could have.

First up is the home reversion scheme, characterised by selling a share of your home to an equity release lender in exchange for a tax-free lump sum of cash.

With a home reversion in the Wirral, you will have to accept that the lender will purchase a share of your home for less than the market value, so you are losing money in this sense.

However, you will be able to enjoy tax-free cash that does not need to be repaid until you die or move into care permanently.

Home reversion schemes are less common than lifetime mortgages, but they are still increasing in popularity as the costs of living are rising and pensioners are seeking new ways of topping up their retirement income.

At the end of a home reversion, it can be stressful for the family of the homeowner as they have to move all possessions out of the property in preparation for the sale.

Any tenants in the property (who must be approved by the lender) will have to move out before the sale.

Please call our 24-Hour Helpline: 0330 058 1579

Equity Release in Wirral: Lifetime Mortgage

The lifetime mortgage scheme in the Wirral is very different from a home reversion. You do not sell your home off, so you remain the homeowner, but instead you take out a mortgage and you receive monthly payments or a lump sum of cash.

Lifetime mortgages are very popular as homeowners can access a large amount of cash through this method, and there is no pressure to pay it back as it is paid off through the sale of their property.

Generally, you are not allowed tenants with a lifetime mortgage, so you would have to refrain from allowing people to rent out rooms in your home if you opted for a lifetime mortgage plan in the Wirral.

Please call our 24-Hour Helpline: 0330 058 1579

The Different Types of Lifetime Mortgage in Wirral

When you start looking into lifetime mortgages, you will realise that there are many different types to choose from, and we are going to describe each one today.

1. The Drawdown Plan

The drawdown plan is a very common option in Wirral as you are able to benefit from an initial lump sum as well as regular payments. This is because you set up a cash reserve that you can withdraw money from whenever you need it.

This is an excellent option for people who will need to dip into their funds regularly, as they are able to withdraw money whenever they need to.

As interest is only applied to the withdrawn cash, it is also a great way of keeping the accruing interest low.

However, as the interest rates on drawdown plans are not fixed, they may rise which can discourage homeowners from withdrawing cash, and leave them in a financially vulnerable position.

Yet, as the loan doesn’t have to be repaid, they would never end up in irreversible debt so to speak.

2. The Lump Sum Plan

With a lump sum arrangement in Wirral, you would receive your loan in the same way as you would with a home reversion – all in one go, which is also known as a lump sum.

The interest rates are impressively low with this scheme, but it does add up over time if you are not making repayments.

If you want to spend your money on a single expense, this plan may work for you as it does not involve small monthly payments.

As for the cons of this scheme, it does not provide you with a consistent income, which can be a problem if you simply want a top-up to your retirement income.

Please call our 24-Hour Helpline: 0330 058 1579

3. The Second Home/Holiday Home Plan

We have already hinted at what the second home plan entails.

This scheme is used by people who want to purchase a second property but don’t have the funds readily available to do this, so they release equity as a way of paying for the property.

This scheme is very flexible as you can choose a property anywhere in the world, which means you could get great value for money on your loan if you select an area with an affordable property market compared to the Wirral.

Having said that, it could be better to downsize, spend less on your mortgage and bills, and use this additional money to purchase a second home. You would obviously only want to do this if you were prepared to leave your current property.

4. The Enhanced/Ill-Health Plan

This plan was designed for people who struggle with their health, as lenders are prepared to offer a better deal to these people, such as offering a higher loan amount.

You also may be eligible for this plan if you are one of our older equity release customers.

Unlike with means-tested state benefits, you usually do not have to prove your disability through a medical examination if you apply to this plan – you simply need to fill out a questionnaire, and potentially provide a doctor’s note, so it is as low-stress as it can be.

Another benefit is that you could use this equity release loan to fund home improvements that make your retirement easier, such as getting a stair lift or arranging your home in a way that makes it easier to move around without risking injury.

On the other hand, this scheme is clearly not accessible to everyone, as many potential equity release consumers do not have a disability.

If there is a medical examination that must take place in order to obtain eligibility, some homeowners will not want to go through this process.

Please call our 24-Hour Helpline: 0330 058 1579

5. The Voluntary Repayment Plan

As we have discussed, it is possible to make repayments with some schemes, and there is no better example of this than the voluntary repayment plan, which allows you to make repayments whenever you want to.

If you are earning enough, you could commit to fixed monthly payments, but if not, you would be able to pay back amounts on an ad-hoc basis. This makes the voluntary repayment plan flexible.

However, it is perhaps not as flexible as you would imagine, given that there are limits to repayment, such as having to wait a certain amount of time before repaying the loan in full, or not ever being able to completely pay it back.

6. The Buy to Let Plan

A buy-to-let plan is another way of securing a second property, but with this plan, you would be renting out the second home to generate income. You would be able to select any location for this, but the property itself would have to be approved by your equity release lender.

With this arrangement, there is almost always an option to make voluntary repayments. This can work well as you are receiving a consistent income from the rental property so you are usually in a position to start repaying some of the loan.

However, not everyone receives a loan high enough to fund the purchase of a new property, so you would most likely have to already own a high-value home to be entitled to take out equity with a buy-to-let plan.

7. The Income Plan

If you just need a little top-up to your retirement income, such as extra money to pay the bills, the income plan might be ideal for you. A fixed amount is transferred to you each month, and you can rely on this income to assist you for the rest of your life.

This plan works best for clients who do not need access to a large amount of money immediately, such as clients who need a loan to pay their bills, pay off debts, or fund travel.

As the income plan is one of the more modern plans, it is still being adopted by lenders across the UK, so it may not yet be available where you are in the Wirral. Get in touch with us to find out whether you could enjoy this plan.

Please call our 24-Hour Helpline: 0330 058 1579

8. The Interest Only Plan

The interest-only plan is not dissimilar from the voluntary repayment plan, but instead of paying back loan amounts, you would be paying back interest (2). You can choose to do this however you like, so you could pay the full amount back or pay back small amounts when you can afford to.

If you choose an interest-only arrangement, you could leave more inheritance to your family as you would be paying back the interest as you go, so less interest would be added to your overall loan amount, and the compound interest rate would be lower.

However, this plan is not recommended for people who are not earning a consistent income, as in this situation, you should consider a scheme that does not require you to repay the loan at any point.

Do I Have to Have a Lifetime Mortgage or a Home Reversion With Equity Release in Wirral?

Lifetime mortgages and home reversions are the most common types of equity release in Wirral, so if you are considering taking out equity, they are likely to be the first schemes recommended by an equity release adviser.

However, there are also retirement mortgages that coincide with your retirement, so you can plan to get the loan as you are finishing work, meaning you are never left in a financially precarious situation.

With a retirement mortgage, there is also an option to pay back the interest, provided that you specifically request a retirement interest-only mortgage.

Please call our 24-Hour Helpline: 0330 058 1579

What are the Alternatives to Equity Release in Wirral?

Before you decide to release equity in Wirral, consider whether you could borrow money from a family member or a close friend.

If you only need a small amount to fund something specific, this may be the best option for you. It will obviously only work if you have mutual trust and you have someone who can afford to lend you money.

Another option is to re-mortgage your home, which involves transferring to a new mortgage without moving home.

The interest wouldn’t be as high as it is with equity release as you would be paying off the loan on a monthly basis. However, this does mean you will be required to prove that you can afford to do this, which means having a good credit history and a consistent income.

Another option is to downsize, either as an option on its own or as a means to release equity from the property you move to.

If you can find a home that suits your needs and is within your budget, consider this option as you will not have to get into debt to fund it.

Please call our 24-Hour Helpline: 0330 058 1579

Who Can I Speak to For More Information About Equity Release in Wirral?

To learn more about how equity release in Wirral works, please get in touch with us for a free initial consultation.

If you are set on a specific scheme, we are happy to focus our conversation on this scheme and explain the features and risks of it.

That being said, many of our customers are unsure which plan they would like to pursue, so our consultations often look like exploring the different options in the Wirral and diving into the advantages and disadvantages of each one.

Even if you are confident about the scheme you want to be a part of, we would still advise you to browse the other options, as you may find that some of the arrangements are more attractive than you initially thought.

What’s more, if you discover you are ineligible for your chosen scheme, it is wise to have other options in mind so that you can quickly reapply to a different plan and still receive your equity release loan in good time.

Remember that many of the plans are similar, so to be rejected from one does not mean you will experience none of the same benefits on another scheme.

For instance, if you are set on receiving a lump sum and you are rejected from a lump sum plan, you could have a home reversion and still receive the cash all at once, or you could even opt for a drawdown plan and get a small lump sum at the beginning of the scheme.

The fastest way to figure out what you need is to call us on 0330 058 1579 to speak to one of our expert advisers. They are ready and waiting to help you with your dream of releasing equity from your Wirral home.

References

[1] Have Property Prices Increased in Your Area? https://www.karltatler.com/pages/market-insight-february-2021#:~:text=Across%20Wirral%20and%20Cheshire%20West%2C%20average%20property%20prices%20increased%20by,been%20slightly%20less%20upon%20completion.

[1] Interest rates rise: a guide to mortgage types for first-time buyers, second steppers and the over 55s https://www.standard.co.uk/homesandproperty/buying-mortgages/mortgage-guide-first-time-buyers-lifetime-mortgages-reverse-second-steppers-b1006092.html

 

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