Flexible Options with Equity Release

27th September 2019

There are many reasons why having a flexible body is essential to our health and well-being. There are also many reasons why flexibility in our finances is equally beneficial. Thankfully, nowadays the Equity Release market has developed to such an extent that there are so many flexible options available with the features they offer that any plan you choose will leave your finances in the best of health!

Flexible Finances with Equity Release

Equity Release products have never seen such substantial development in the features they offer in response to customers’ demands for greater flexibility and choice. With almost 300 options available¹, the chances of finding a plan to meet the diverse social and financial needs of each individual is greater than ever before.

The Equity Release advisers’ tool-kits have been reloaded with gizmos and gadgets and they are now better equipped than ever to find a product for even the most demanding of situations. Take a look at what is now on offer to our clients:

Equity release product options and features²

Product options with this feature – August 2018 Product options with this feature – August 2019 Annual change (%)
Sheltered/age restricted accommodation 42 155 269%
Interest-serviced (regular interest payments) 22 81 268%
Downsizing protection 63 129 105%
Inheritance guarantee 51 96 88%
Draw-down facilities 47 88 87%
Voluntary/partial repayments with no early repayment charge 99 178 80%
Fixed early repayment charges 75 116 55%
Regular income payments* 0 16 n/a
Total product options 126 287 128%

Source: product data supplied by Key, August 2019
*Products offering the regular income payments feature were introduced to market January 2019

Regular interest payments

Many clients wish to reduce the build-up of interest by making regular payments either in part or in full. Even better, if they are no longer able to continue making these payments, they can easily switch to a roll-up option (allow the interest to ‘roll-up’ instead) at any time, with no risk of repossession of their house at any point.

Sheltered/ age restricted accommodation

Historically, these types of housing were excluded from many Equity Release products, yet client demand today is so great that there are now more plans that enable clients living in these types of housing to release equity from their properties and provide them with the finance they are looking for.

Downsizing guarantee

In later life, the desire to downsize to a lower value property is a common choice and more plans nowadays enable you to either repay the loan when you move with no early repayment charge, or transfer the loan to the new property.

Inheritance guarantee

A popular feature which enables you to ring-fence a proportion of the property’s value to leave as a guaranteed inheritance for your loved ones.

Draw-down facilities

The ability to withdraw from a maximum agreed amount (based on the value of your property) in stages rather than taking out the maximum allowance in one go means that the interest in only applied when the additional funds are withdrawn. This keeps costs down and is a feature of many plans nowadays.

Voluntary repayments with no early repayment charge

If reducing the loan over time and minimising the build-up of interest is important to you, this feature is essential in the plan you choose. The ability to make ad-hoc repayments – normally up to 10% of the initial loan per year – with no early repayment charges – is now more readily available on many plans.

Fixed Early Repayment Charges (ERC)

If you wish to repay the loan during the fixed period when a charge will be issued (typically 5 – 15 years), this fee will be at a pre-determined fixed rate and will decrease on a sliding scale. When this fixed period comes to an end you can repay the loan without any penalty. In this way you are able to financially plan for any additional fees.

*not all plans offer a fixed ERC: some are based on ‘Gilt yields’ at the time of repayment. Your adviser will make you aware of this feature if it is on your chosen plan.

Regular income payments

If you wish to supplement your pension income, or boost your finances on a predictable monthly basis, this feature enables you to release your funds in regular monthly payments rather than taking it out as a lump sum.

Lowest rates of interest ever

At a record low interest rate of 4.91%³, the plans on offer nowadays are at their most competitive. More than half of the plans offer a rate of 5% or less, and 21% of the products offer rates at 4% or below¹. More importantly, these rates are fixed for the duration of the loan enabling you to manage your finances for the future.

Equity Release - more popular than ever

More and more people are seeing the benefits of releasing equity from their property to access funds for lifestyle choices or necessities. The use of housing wealth to support later life financial planning, supplement inadequate pension funds, provide essential finances (for medical bills or home renovations for example), or finance luxury expenditures is more popular than it has ever been. With interest rates at their most competitive ever, no wonder £1.85bn in housing wealth was released in H1 2019 by homeowners 55+ in order to respond to their financial needs¹.

Should you wish to benefit from the plethora of options available for releasing the equity from your housing wealth, it is more important than ever that you seek professional advice from a specialist who is aware of these ever-changing features of the plans available. As an Equity Release Specialist with over 25 years working in Financial Services, Kevin Woods is an expert who strives to find the most suitable plan for his clients from the wealth of options continually available. Should Equity Release be of interest to you, call Kevin Woods on 01489 454545, or email kevin.woods@therightequityrelease.co.uk to discuss your situation without charge or obligation of any kind

¹ Equity Release Market report: Equity Release Council Autumn 2019: 24 September 2019
² product data supplied by Key, August 2019
³ As of July 2019

Why not get in touch and see how we can help?

Equity release is the answer to so many financial questions. If you would like to know more about it, and see if it could be the right move for you, please book an appointment or request a call-back