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July 23, 2014 Latest News

Equity Release News – July 2014

George Osborne has made important changes to the way in which people can take and use their pension fund. The 55% penal tax, which applies at present, on taking a lump sum above the 25% tax free allowance, instead of buying an annuity, (which is a guaranteed income for life), will be removed. The 75% balance of the lump sum will, however be added to income and taxed accordingly. There have been suggestions that people will take the fund and spend it frivolously on a Maserati or some other extravagance. In fact, it does not matter when you draw the pension it is still generally not enough to supply enough income upon which to live in retirement.
It is reckoned that on average income drops by 40% upon retirement. This is particularly unfortunate, as this is when people have more time to pursue their interests.

PENSION v PROPERTY

The equity release market grew by 36% this year, because more people are looking to their property to fund their retirement. House prices have risen by 500% in the last 30 years which means that home is a fast growing asset. To realise this growth people would have to sell their abode but with Equity Release people continue to own their home, live in it, while accessing some the equity that has built up over the years.
Equity Release has become more of a family decision than ever. About 25% of the money is being spent on the family. Life expectancy averages 84 years of age. It is expected any money that would go to the family when they are in their fifties or sixties when they could already be financially comfortable. By using Equity Release, money can be gifted at a time when it is needed, such as when grandchildren impose the greatest financial burden on a family or when a financial boost is needed most, such as education fees, weddings, property deposits or business investments.
Funds are not always given away as some people taking up Equity Release do so for home improvement, and some for realising their dream holiday, changing their car etc. 40% use the money to clear interest only mortgages, thus they retire without having to worry about mortgage repayments, with the resultant improvement in their cash flow.

Like any other product, it is important to obtain the right information and independent advice.
I am an independent adviser at The Right Equity Release and am here to help, so please call me on 0800 612 6755 or email me on laurence.silver@therightequityrelease.co.uk and I will explain the detail of Equity Release, without obligation.

This is a lifetime mortgage. It may affect your entitlement to state benefits & will reduce the value of your estate. Think before securing other debts against your home. To understand the features and risks, ask for a personalised illustration. Your home may be repossessed if you do not keep up repayments on your mortgage. The Right Equity Release does not charge any up front fees. A fixed fee is only charged on completion of an Equity Release Plan. Typically, this is 1.5% of the total facility or £995 whichever is the greater.