Equity release and inheritance:
Equity release is a financial product that allows homeowners to access the equity in their homes, providing them with a lump sum or regular income in the form of a loan secured against their property in the same way as a traditional mortgage. While equity release can be a useful tool for those looking to supplement their retirement income or pay of existing debt such as an interest only mortgage, many people are concerned about the impact it could have on their inheritance. In this blog, we’ll be exploring the relationship between equity release and inheritance and what you need to know.
Firstly, it’s important to understand that taking out an equity release product will reduce the value of your estate, potentially impacting the amount of inheritance you’re able to leave to your beneficiaries. However, there are several factors to consider before deciding whether equity release is right for you.
What you need to know:
- Have an open conversation with your family: Before making any decisions about equity release, it’s important to have an open and honest conversation with your family. Discuss your plans and concerns with them, and make sure they understand the potential impact on their inheritance.
- Consider alternative options: If leaving an inheritance is a top priority for you, it may be worth considering alternative options to equity release. For example, downsizing to a smaller property or using savings or investments to supplement your retirement income.
- Choose the right equity release product: There are several types of equity release products available, each with their own pros and cons. For example, a home reversion plan allows you to sell a share of your property in exchange for a lump sum or regular income, while a lifetime mortgage allows you to borrow against the value of your home. It’s important to choose the right product for your individual circumstances and goals.
- Consider inheritance protection: Some equity release products offer inheritance protection options, which can help to preserve the value of your estate. For example, some lifetime mortgages allow you to ring-fence a portion of your home’s value for inheritance purposes.
- Seek independent advice: Before agreeing to an equity release product, it’s important to seek independent advice from a qualified professional, such as a mortgage broker or financial advisor. They can help you understand the potential impact on your inheritance and ensure you make an informed decision.
Conclusion
In conclusion, equity release can be a useful tool for homeowners looking to access the equity in their homes, but it’s important to consider the potential impact on your inheritance. By having an open conversation with your family, considering alternative options, choosing the right product, considering inheritance protection options, and seeking independent advice, you can make an informed decision that’s right for your individual circumstances. At our mortgage broker firm in Basingstoke, we’re committed to helping our clients navigate the world of equity release and make informed decisions about their financial future.
* A lifetime mortgage is a long term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate.
* Your home may be repossessed if you do not keep up repayments on your mortgage.
My name is Mark Jones, I am the owner and senior broker here at MDJ Mortgages. As an experienced advisor on Equity Release I am here to help guide you through the process.
I am a member of the Equity Release Council where I am regulated and have agreed to follow their high standards of conduct and practice, giving you the reassurance that you are getting the best advice, whatever your circumstances.
Further Resources
Learn more about Equity Release through one of our helpful tools.
Releasing equity from your home is a huge financial decision, the information available can be overwhelming and the process a daunting prospect. That’s why we have produced this guide to help you understand the basics of what you need to think about and factors to consider. Simply click on the link below to download your FREE guide to Equity Release.
Whether you are looking for additional income, want to help out family or go on that round the world, once in a lifetime trip we can help you understand how much you can borrow and what the interest rate is likely to be. Simply complete the questionnaire and we will provide you with your free Equity Release, Lifetime mortgage, illustration.
Whether you are looking for additional income, pay off your current mortgage, help family out or go on that once in a lifetime trip Equity Release may be the answer. We can help you understand how much you can borrow and what the interest rate is likely to be. Simply complete the questionnaire and we will provide you with your free affordability assessment.