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Equity Release in Aberdeenshire

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Equity Release in Aberdeenshire

Equity release in Aberdeenshire is an effective way of converting the cash tied up in your home into cash in your bank account. People in Aberdeenshire are using equity release as a way to get the cash that is available to them in their home’s value, without having to sell their property to do so.

Equity release can be a huge financial decision for many people in Aberdeenshire. Knowing if it is the right decision for you will require some research and possibly a conversation with the team at Equity Release Warehouse.

If you would like to learn more about equity release in Aberdeenshire, and if it is the right choice for you, then speak with a member of the Equity Release Warehouse team for advice and support.

Please call our 24-Hour Helpline: 0330 058 1579

What is Equity Release?

Equity release is an overarching term used for a range of processes that can be used to transfer the equity (also known as ‘cash’) from your property into cold-hard cash.

But what does equity in your house mean?

If you have a mortgage for your property in Aberdeenshire, then the equity within your home is the current value of your home minus the mortgage that you have left to pay off.

For example, if your house has a current value of £220,000, and you have £70,000 outstanding on your mortgage, then the amount of equity that you could release is £150,000.

The example above highlights the huge sums of equity that you could release and access as cash. It is important to think about why you would like the cash from an equity release scheme when deciding if equity release in Aberdeenshire is appropriate for you and your circumstances.

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Methods of Equity Release in Aberdeenshire

The two most popular methods of equity release on offer to you in Aberdeenshire is a lifetime mortgage or a home revision plan.

Each one of the two methods mentioned has its own benefits to consider and appropriateness for different circumstances. It is important to consider the main features of the two methods available to you in Aberdeenshire.

Below are the main features of each equity release plan. It may be best for you to read the features below and arrange a call with an equity release specialist at the Equity Release Warehouse.

1. Lifetime Mortgage

A lifetime mortgage is one of the most widely used equity release plans used across Aberdeenshire.

If you have never come across the term ‘lifetime mortgage’ before then you may be wondering what on earth it is.

A lifetime mortgage works very similar to the principles of a regular mortgage that you would take out to purchase your home; an equity release provider will loan you the amount of equity that is currently available in your property.

But rather than the loan being sent straight to the solicitor of a house that you are buying, a lifetime mortgage loan is sent directly to your bank account as cash to spend in any way you wish.

The typical equity release in Aberdeenshire will offer to loan you somewhere in the region of 20-50% of the total equity available in your home.

An attractive feature of a lifetime mortgage is that you are not required to make any repayments on the equity release whilst you are still alive.

This feature alone makes it very popular with residents of Aberdeenshire as they may not be in a position to cover a loan repayment plan with their intended retirement income.

Despite the loan not having to be paid off whilst you are alive, the loan does need to be repaid (with interest) at some point. With a lifetime mortgage, the loan is paid back either when the final borrower passes away or goes into a full-time care facility.

The total amount of the equity loan, plus interest, can be paid back through the sale of the property that the loan was borrowed against.

An attractive feature of a lifetime mortgage is that you can’t continue to live in your home that the equity release plan is borrowed against. You will also be able to maintain the ownership of the property.

This feature means that people who take out a lifetime mortgage in Aberdeenshire have used the released equity for home renovation; which in turn can increase the value of your property.

Lifetime mortgages have many attractive features but it is important to note the compounding Interest that will be applied to the total loan amount when either the last borrower passes away or enters full-time residential care.

Compound interest exponentially grows over the time that it is not repaid and can reach significantly large sums, sometimes even more than the loan amount that was originally loaned.

This can result in the amount of inheritance that you expected to leave behind is less than what you had hoped. As the loan needs to be repaid back by the sale of the house, there may not be anything left over for your children.

Many lifetime mortgage plans offer a ‘no negative equity’ guarantee – meaning that you or your beneficiaries will not have to pay back more than the value of your home.

Within a lifetime mortgage, there are two types you can take: an interest roll-up lifetime mortgage or an interest-paying lifetime mortgage.

An interest-roll-up lifetime mortgage is a popular choice in Aberdeenshire for those who don’t wish to make any payments towards their loan whilst they are alive. No repayment is made until the sale of your home after you have passed away or gone into full-time care.

On the other hand, an interest-paying lifetime mortgage offers you the opportunity to reduce the total amount of loan to repay after you have gone by paying some contributions towards the loan amount. This can help bring down the total interest owed.

Both of these mortgage offers in Aberdeenshire can be taken out as a lump-sum or a regular income.

You may wish to speak to an equity release specialist in Aberdeenshire about which way to access your funds would be best for your circumstances.

Some further things to discuss with an equity release advisor when discussing lifetime mortgages:

  • What is the minimum age
  • What are the current interest rates
  • What percentage of my home equity can i release
  • Does the mortgage offer include a no negative equity guarantee
2. Home Reversion

A home reversion plan is the other most popular equity release in Aberdeenshire.

A home reversion plan in Aberdeenshire works very similar to a lifetime mortgage. The main difference between the two is that you will be required to sell either part or all of your home in return for a sum of equity that you have tied up in your home.

Most home reversion providers will allow you to carry on living in your home until you die or move away.

Home revision plans are available to home-owners who are 60 years or older. However, to get the best equity release deals in Aberdeenshire, you may need to be 65 years or older; equity release lenders will normally offer you a larger proportion of your equity the older you are.

A strong feature of home revision plans is that you are not charged any interest on the equity amount that has been released.

Most home reversion lenders will not charge you rent on your property once you have sold them part or all of your home for the equity. However, it will remain your responsibility to maintain the property.

Similar to a lifetime mortgage, you can have the equity amount as either a lump-sum or regular payment. Speak to an equity release specialist for more advice on which option is best for you.

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How much Equity Release in Aberdeenshire can I access?

Equity release in Aberdeenshire is not the same for everyone. The amount that is offered to you for withdrawal can vary depending on factors such as your age and the total amount of mortgage you have left to pay.

Even though equity release in Aberdeenshire can vary, the typical amount offered to people is between 20-50%. This percentage tends to increase for those over 65 years of age or for those who have a higher-value property.

If you are under 65 years of age, you may be able to qualify for equity release in Aberdeenshire.

Even if you are 55 years old in Aberdeenshire, most equity release lenders will be able to offer you a deal that releases over 10% of your home’s current equity.

Why should I enter into an Equity Release plan?

The overriding reason that people in Aberdeenshire enter into an equity release plan is so that they have access to large sums of cash. For most people, the only way to do this is by selling their home and downsizing into a less valuable property and using the excess cash from the sale to fund their plans.

Equity release in Aberdeenshire is a way of having the best of both worlds – access to the cash and remaining in your current home.

If you decide to discuss equity release in Aberdeenshire with an equity release specialist then one of the topics you will cover is your plans for the cash when you receive it.

Equity release in Aberdeenshire can’t put towards home renovation projects. Funding renovation work, such as an extension or modifying the rooms throughout the house, not only improves the quality of your living but also increases the overall value of the home’s market value.

This can be a double-edged positive as it improves the house that you are living in as well as increasing the amount of cash that is left over when the house is sold and the equity release loan is repaid.

If you plan to remain in your home well into old age and require additional care assistance, the equity release funds can be used to purchase specialist equipment. This can be anything from inserting a stair lift or reconfiguring the floor plan to make it easier to navigate around the property in a wheelchair.

The only restriction on this is the number of funds that you have available.

The funds from your equity release in Aberdeenshire are not restricted to being tied to some sort of home renovation. You can choose to spend the money on a family holiday or maybe you could gift some of it to a younger family member who is trying to get on the housing ladder themselves.

If you are considering equity release in Aberdeenshire, you can speak to an equity release advisor from Equity Release Warehouse for more information on the most suitable equity release plan for your spending plans.

Please call our 24-Hour Helpline: 0330 058 1579

How safe is Equity Release in Aberdeenshire?

The amount of funds that become available in equity release schemes can make people nervous about the risks that could accompany the plans.

It is important to know that equity release is a highly regulated sector in the UK and equity release providers are required to adhere to professional standards.

The sector is regulated by two main bodies within the UK: the Financial Conduct Authority (FCA) and the Equity Release Council (ERC).

It is important to know if your equity release provider is in accordance with these bodies. The FCA found that when consumers are given unsuitable advice, they can suffer major harm which affects them for the rest of their lives[1].

To ensure that you are protected against any possible wrongdoing, you should ask your equity release specialist if a lender is adhering to FCA and ERC standards.

Please call our 24-Hour Helpline: 0330 058 1579

Is Equity Release in Aberdeenshire right for me?

Equity release in Aberdeenshire could be the best way for you to gain immediate access to a large proportion of your overall asset wealth.

You may have big plans which need a large amount of capital that a bank loan would not qualify you for, or the interest rates and associated costs might be unaffordable.

Using equity release in Aberdeenshire to achieve access to your existing asset wealth offers the further advantage of being tax-free. All the money that you receive from the equity release provider will be exempt from any taxes and any surprise fees.

Understanding the exact figure that you will receive can be a huge piece of mind for some people. If that is the case, then an option like a lifetime mortgage might be the best avenue to go down; you won’t have to pay anything back until you either die or enter a care facility.

As you enter into your retirement you may not be ready to compromise your lifestyle as you begin to enjoy boundless leisure time.

For a lot of people, retirement means having to downsize to have to fund their day-to-day living. With equity release in Aberdeenshire, you can remain in your home whilst you enjoy the life that your funds can provide.

Please call our 24-Hour Helpline: 0330 058 1579

Negatives of Equity Release in Aberdeenshire?

You should consider the drawbacks to an equity release in Aberdeenshire before entering into an equity release plan.

Equity release plans in Aberdeenshire can leave your family with significantly less inheritance than you would like them to have. Compound interest on a lifetime mortgage can eat into any remaining equity in a house’s overall value, no matter how much renovation work you may have done on the property.

If you want to move around in your retirement then you might be restricted under certain equity release schemes. There are equity release schemes on the market which require you to remain in the same property until you either pass away or enter into a residential care facility.

This may be a drawback for you if you were hoping to relocate closer to family or another location.

Unfortunately, not everyone will qualify for equity release in Aberdeenshire. Despite being over 65 years old or in good health, you won’t qualify if your house is below £70,000.

If you are considering equity release in Aberdeenshire, you can speak to an equity release advisor from Equity Release Warehouse for more information on the drawbacks of equity release schemes for your own personal circumstances.

Please call our 24-Hour Helpline: 0330 058 1579

Will I Qualify for Equity Release?

You might have your plans in mind for how you would spend your equity from your house. However, you might be unsure if you are able to realise these dreams through equity release in Aberdeenshire.

Before speaking with an equity release advisor, take a look at these questions to get an initial idea of if you would qualify:

Are you 55 years or older? You need to be 55 years old as a minimum to apply for equity release in Aberdeenshire.

Many providers have a policy that only accepts applicants who are 60 years older. The older you are, the higher the likelihood that you will be accepted for an equity release scheme.

Do you own your own home? If you don’t own your own home then you will automatically be refused for any equity release schemes. Equity release requires a home to be used to loan an agreed amount.

In Aberdeenshire, 71% of homes are classed as private owner-occupier[2], which means that there are plenty of other residents in your area who are able to access equity release.

Is your home worth at least £70,000? To qualify for equity release in Aberdeenshire and across Scotland you must have a home that has a value over £70,000.

How much equity do you have in your home? You might have been worried that you need to have paid off your mortgage in order to qualify for equity release in Aberdeenshire.

You certainly don’t need to be mortgage free to qualify, but you should look out for the provider’s requirements on the amount of equity that you currently have in your home.

In Aberdeenshire, providers will typically have a minimum equity requirement of £10,000, with some providers requiring up to £100,000 as a minimum.

If you think you would like more information on equity release in Aberdeenshire, then speak to a member of our friendly and qualified team at Equity Release Warehouse for more advice and support.

References

[1]https://www.fca.org.uk/publications/multi-firm-reviews/equity-release-sales-and-advice-process-key-findings

[2]https://www.aberdeenshire.gov.uk/media/21913/aberdeenshirelocalhousingstrategy2018-2023.pdf

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