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2 Agenda Getting more out of retirement What is equity release? Eligibility So what do people actually do with the money? The alternatives How equity release works:- Lifetime Mortgages Home Reversion Plans Making the decision The Equity Release Council Further information

3 Introduction – Getting more out of retirement Potential care costs Savings and investments not performing well Pension income may be less than you want/need Increased housing equity

4 What is equity release? Advantages: Accessing capital tied up in your home can solve financial problems You can stay in your home You can use the money how you wish

5 What is equity release? Disadvantages: You may not be able to release sufficient capital for your needs There are costs associated with equity release It could affect your entitlement to state benefits

6 Eligibility Generally age 55 plus Minimum property value, usually around £70,000 Minimum lump sum usually around £10,000 A small mortgage can be repaid Generally freehold or long leasehold and conventional construction property

7 What people do with the money Reasons typically fall into two main categories: Things I NeedThings I Want Property maintenance/repairsHome improvements Medical care/care in the homeHolidays Pay bills/consolidate debtsGifts Financial support for familyTreat family Income shortfallBuy a second/holiday home

8 The alternatives Downsizing State Benefits and grants Reduce living costs Taking in a lodger Use savings/investments Help from family/friends

9 How does equity release work? There are two main types of equity release schemes: Lifetime mortgage or Home reversion plan

10 Lifetime mortgages – the small print First legal charge on property Interest is charged and is either added to the loan or repaid on a regular basis You may continue to benefit from any increase in property value You can release a one-off lump sum, or a series of smaller lump sums When the property is sold, the total amount owed, including the rolled-up interest, is repaid

11 Lifetime mortgages – the small print If property prices fall, your outstanding mortgage may account for a higher percentage of your property value The longer you live, the less equity will remain in your home as the interest rolls up on the loan If interest rates fall, you could be tied into an uncompetitive interest rate. If they rise, the opposite may be true if you opt for a fixed rate. Reduces any inheritance for your family

12 Home reversion plans - the small print Involves selling all/part of your property You no longer benefit fully from increases in property value You have the right to stay in the property as long as you wish You can ring-fence a percentage of your property value for inheritance purposes Income for life/lump sum options available Home reversion plans may allow a higher lump sum to be releases than via a lifetime mortgage

13 Home reversion plans – the small print You no longer benefit fully from increases in property value You no longer fully own your own home Reduces any inheritance for your family

14 Making the decision Always seek independent financial advice Ensure you get independent legal advice Involve your family/beneficiaries with your decision Be honest and open with your adviser and your family Read the Money Advice Service free leaflet on equity release – “Equity release schemes Lifetime mortgages and home reversion plans”

15 Equity Release Council – protecting your interests You will never owe more than the value of your property You have the right to move to a suitable alternative property without financial penalty You have the right to choose an independent solicitor to act for you Your solicitor must verify that you understand the implications of the plan and the impact equity release has on your estate

16 Sources of further information The Equity Release Council Age UK Citizens Advice Bureau Council of Mortgage Lenders Department for Work and Pensions Home Heat Helpline Home improvement agencies such as The Home Improvement Trust Money Advice Service