EQUITY ALTERNATIVES

In every case the initial discussions you have should centre on their current and future needs/objectives to try to confirm whether they need a lump sum only, additional income or a combination of both. The following alternatives in relation to Equity Release should then be considered:
• Their attitude to their property should be assessed and whether they are happy to move property (downsize),
• Their attitude to giving away ownership of their property or reducing the amount of inheritance they may pass on to the children or other beneficiaries.
• The potential for raising funds from their children/family.
• Using any investments or other assets they may have.
• Borrowing through means other than Equity Release.
• Government home improvement grants (if relevant).

Lifetime Mortgages v Home Reversion Plans
The advice to choose one type of scheme in preference to another will largely depend on the client’s needs, tax position, future intentions for the property and the client’s attitude to risk. The Clients emotive attachment to the ownership of the property can also play a large part in the decision process.
Set against the desire to retain legal ownership of the property, one of the main considerations for most clients will be the value or proportion of their property that will eventually pass to their children/beneficiaries on death. If clients wish to ensure that they can guarantee a fixed proportion of the value of the property to be available on their death then Home Reversion will be the more appropriate plan.

For further information, please call us on tel: 01268 573 306 or email us

This is due to the fact that the Home Reversion provider is only entitled to the value of a fixed percentage of the property on death, whereas a Lifetime Mortgage provider could, theoretically, be entitled to the full value of the property, due to interest compounding on the mortgage.

However, a Home Reversion Scheme will usually be able to produce the highest lump sum and may be more appropriate where this is of paramount concern. This is dependent on the specific Home Reversion provider’s criteria however. Northern Rock offers a Lifetime Mortgage with the option of protecting a proportion of the eventual sale value of the property, however this option reduces the overall lump sum available to the client.
If the client requires a regular income, then a Lifetime Mortgage may well be more appropriate