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Equity Release in Newcastle - Lifetime Mortgage Near Me

Lifetime Mortgage & General Equity Release Advice in Newcastle
Reviewed by Tom Philips

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Equity Release in Newcastle-Upon-Tyne & Near Newcastle-Upon-Tyne

Equity release in Newcastle-Upon-Tyne is an umbrella term used to describe several different types of equity release plans, which allow individuals to release equity from their home.

By doing this, you do not have to sell your house or move house in order to gain access to the money tied up in your property.

All equity release plans across Newcastle-Upon-Tyne and the rest of the UK are regulated by the Financial Conduct Authority and the Equity Release Council to ensure that they are fair and safe investments for all.

By being a part of these authorities, all plans and advisors will need to meet strict standards.

There are two main types of equity release in Newcastle-Upon-Tyne, which are known commonly as lifetime mortgages and home reversion plans.

These are the two most popular types of equity release across Newcastle-Upon-Tyne and will certainly be discussed with you by your equity release advisor.

How much equity is in your home depends on the value of your home and how much of a deposit you initially put down on your house when you first bought it.

The equity in your home will be the total value minus the outstanding mortgage on the property.

It is important to remember that the equity in your home is yours to own and use, so releasing equity from your home is a way of gaining access to your own money that has been tied up for years in the asset that is your home.

The great thing about equity release in Newcastle-Upon-Tyne is that any money you receive is tax-free and can be spent on whatever you like.

You can spend it on a nice holiday for yourself, a new car, some home improvements or helping loved ones with any money issues that they might be having.

The other benefit of equity release in Newcastle-Upon-Tyne is that there is nothing to repay whilst you are still living. Your loan will only need to be repaid when you pass away or move out of your house and into long-term care for health reasons.

However, individuals can’t forget about interest on their equity release loan. Interest will be charged on every loan, and will quickly compound if they are not paid off on a frequent basis.

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How Much Money Can I Borrow Against My Home in Newcastle-Upon-Tyne?

How much equity you are able to release from your home in Newcastle-Upon-Tyne depends on a number of different factors and usually varies from person to person.

However, the average amount of equity individuals are able to release from their property is usually anywhere between 20% and 50%. This is a percentage of the value of the homeowner’s property.

A number of factors will influence how much equity you are able to release, including how old you are, the condition of your home and whether you suffer from any health conditions or not. Some of these factors are explained in more detail below.

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1. Poor health means less equity

If you are currently suffering from any long-term or serious health issues, then you will need to tell your equity release advisor so that they can make a full and honest assessment.

If you suffer from a health issue then the amount of equity you might be able to release might be reduced.

2. You will sell your home for less than market value

It is also really important to remember that if you choose a home reversion equity release plan, then you will be selling your home back to the lender for less than the market value.

This means that you will not make as much money on the sale of part of your home than if you were to sell it as normal on the property market.

The benefit to choosing this plan is that you get to remain living in your home for as long as you want, until you pass away or move into long-term care.

This is why the pros and cons of plans like home reversion plans must be weighed up carefully before making a decision. It’s also worth considering the alternatives to equity release.

If you are releasing equity to combat the cost of living, then it might be better to first try to see if you can better manage your budget. Below, we list organisations that may be able to help in Newcastle:

1. Age UK Gateshead

Address: Unit 4 Jackson St, Gateshead NE8 1ED

Telephone: 0191 477 3559

Website: http://www.ageuk.org.uk/gateshead/

2. Age UK Gateshead

Address: Christ Church Hall, Sunderland Rd, Felling, Gateshead NE10 9LR

Telephone: 0191 477 3559

Website: https://www.ageuk.org.uk/gateshead/

3. Age UK North of Tyne & Gateshead Enterprises Limited – Newcastle

Address: 167, Grainger Market, 117 Grainger St, City Centre, Newcastle upon Tyne NE1 5AE

Telephone: 0191 279 0970

Website: https://www.ageuk.org.uk/gateshead/

If you would like to see more organisations of this nature, please check out this page hosted by Newcastle Council.

3. There is a minimum and maximum amount you are allowed to withdraw

There is both a minimum and maximum amount of equity that you are allowed to release from your home, which also tends to depend on your age and current state of health.

The maximum individuals are usually allowed to withdraw from their home is around 50% to 60% of the total value of their home.

For most people, the minimum amount of equity you are able to release from your home differs, but stops at around 10% of the total value of your home.

If you are considering equity release in Newcastle-Upon-Tyne but want more information on how much you are able to release, then you should speak to a member of the team at Equity Release Warehouse for advice.

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4. Will I get taxed on what I receive?

It is also really important to understand that any money you receive through your equity release loan is not taxed. This means that you will receive exactly how much you are supposed to and every penny will be going straight into your pocket.

Nevertheless, you will be expected to pay interest on the loan you receive, which will be liable to compound over time.

This is why it is always recommended that you pay off this interest whenever you can, in order to avoid this money compounding and getting out of control.

Types of Equity Release in Newcastle-Upon-Tyne

Below, we explain the two types of equity release types available to you:

1. Lifetime Mortgages

Lifetime mortgages are exactly what they sound like, mortgages that will last for the rest of your life. Lifetime mortgages are extremely popular across Newcastle-Upon-Tyne and the rest of the UK.

A lifetime mortgage is the most popular form of equity release in Newcastle-Upon-Tyne which allows individuals to get their hands on their equity whilst allowing them to still live in the house they know and love.

All money that you receive will be tax-free and sent directly into your bank account.

How much money you receive through your equity release lifetime mortgage loan will depend on the value of your house.

This loan will continue until you pass away or move into long-term care for health reasons. For the entirety of your loan, you will pay interest which will be paid off upon the sale of your house unless paid off sooner.

Lifetime mortgages are extremely popular with homeowners because they are able to spend the money that they receive in a number of different ways.

For example, you can use the money to pay for some much-needed home improvements or to help loved ones or family members with any financial issues they might be having.

Some people consider a lifetime mortgage because they want to use the equity release funds to help grandchildren with the cost of living, university fees or house deposits.

There are a number of different ways you can receive this money. Some people choose to gain access to their money in one large lump sum, and others through monthly payments into their bank account.

This very much depends on your current financial situation and what you would be using the equity release funds for.

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2. Drawdown Lifetime Mortgages

Alternatively, individuals considering equity release in Newcastle-Upon-Tyne can choose a drawdown lifetime mortgage.

This is a great option if you are not entirely sure how much money you will actually need now or in the future. Drawdown lifetime mortgages give individuals a lot of flexibility in how they can receive their funds.

They allow individuals to make a reverse fund of cash, using the value of your property which you are able to gain access to as and when you need it.

With drawdown mortgages, you should only take out the money you need, even if your equity release plan allows you to take out more.

The best thing about this type of equity release loan is that you will not have to repay any interest on the money you don’t need or withdraw, which could save you hundreds if not thousands of pounds. This stops any unnecessary interest from building up and compounding.

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3. Interest-Only Lifetime Mortgages

Interest-only mortgages are a form of lifetime equity release mortgages which are relatively new to the market. They are usually used by homeowners aged 65 or over who might no longer qualify for a normal mortgage or other equity release plans.

With an interest-only lifetime mortgage, you will only have to repay the interest each month and won’t have to repay any percentage of the loaned amount.

Again, you don’t have to repay the full amount until after you pass away or move into long-term care. With a lifetime interest-only mortgage, you will only have to prove to the lender that you can repay the interest payments.

In some circumstances, individuals might even be allowed to pay off some of the loan amounts whilst they are still alive, which will reduce how much interest builds up over time.

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4. Home Reversion Plan

A home reversion plan is the second most common and popular plan for equity release in Newcastle-Upon-Tyne and the rest of the UK.

With a home reversion equity release loan, homeowners have to sell a certain percentage of their home before they are able to gain access to their equity.

Individuals sell a percentage of their property to the lender for less than the market value, and in response gain access to their equity promptly.

You will also be able to remain living in the property that you know and love. As with other equity release schemes, you can opt for one large lump sum or a number of different, smaller payments.

Once again, the value of your property and your current state of health will determine how much equity you are allowed to release from your home using a home reversion plan.

You are usually only allowed to release up to 60% of the value of your home this way, and a minimum of 10%.

The housing market is usually always on the rise, so by opting for a home reversion equity release plan, you will not get as much money.

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What Happens with Inheritance Tax When it Comes to Equity Release in Newcastle-Upon-Tyne?

The biggest benefit of equity release in Newcastle-Upon-Tyne is that you do not have to pay any inheritance tax on the equity money you receive through your equity release loan.

However, if you exceed a certain amount then you might need to pay some inheritance tax depending on your current circumstance.

Actually, you do not have to pay any tax on the equity you receive in most cases, as according to Money Nerd, this money is classed as a loan given to you, instead of income earned by you [1].

Lots of people believe that you do have to pay tax on the equity you receive, which is what stops many people across Newcastle-Upon-Tyne and the rest of the UK from releasing equity from their home.

However, this should never stop anyone from releasing equity from their home.

In fact, there are a number of other myths and misconceptions when it comes to equity release in Newcastle-Upon-Tyne. For example, many people believe that by releasing equity from your home in Newcastle-Upon-Tyne that you are preventing your loved ones from gaining access to their inheritance.

However, this is not the case. The amount of inheritance you are able to leave your loved ones might be reduced, but not lost completely.

When people opt for a home reversion plan, they might also wrongly believe that as they have sold a part of their property they are now unable to leave their loved ones any inheritance. Again, this is not the case.

You will only be selling a percentage of your home, and your equity release advisor will always advise that you contribute to paying off the interest on the loan whilst you are still alive in order to stop the interest from compounding.

If you are considering equity release in Newcastle-Upon-Tyne, then you should speak with your equity release advisor. They will help you to debunk these myths so that you get a clear and informed picture of how equity release in Newcastle-Upon-Tyne works.

Please call our 24-Hour Helpline: 0330 058 1579

Equity Release in Newcastle-Upon-Tyne – What Happens When You Die?

If you know anything about equity release in Newcastle-Upon-Tyne then you will know that you do not have to repay anything on your loan until you pass away or move into long-term care if you get ill.

However, it is important to gain a clear understanding of exactly what happens to your equity release loan when you pass away so that your next of kin and loved ones understand what they will need to do.

They will need to understand the ins and outs of the loan, as well as how the interest works, who they need to contact and how they will receive their inheritance.

However, a complication can arise if you take out an equity release loan with another person, which will be discussed further below on this page.

Most equity release advisors will never advise that you pay off your equity release loan whilst you are still away, as the idea behind equity release in Newcastle-Upon-Tyne is that you keep the loan for the rest of your life.

However, if you do choose to repay your equity release loan early, whilst you are still alive then you might be charged an early repayment fee, depending on your circumstances.

If you think that you will want to repay some of your loan early, then you will need to check with your advisor that your loan allows you to do this before you take out your loan.

By paying back a small amount of your loan, then you might be reducing the amount of interest that is compounding on your loan which will increase how much your loved ones will receive in inheritance.

If you think you want to repay some of the interest, then you might want to consider an interest-only scheme in Newcastle-Upon-Tyne.

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Can I Take Out Equity Release On A Retirement Apartment?

Lots of people who consider equity release in Newcastle-Upon-Tyne often wonder whether they can take out an equity release loan in a retirement apartment or flat.

Unfortunately, the answer is not as straightforward as you are probably hoping for.

If you are wondering if you can release equity from your retirement apartment, then the best thing you can do is get in touch with a member of Equity Release Warehouse for advice.

Some lenders do allow individuals to release equity from their retirement flat, whereas some others do not. This very much depends on where you are in the country and which equity release lenders you qualify for.

If you are unable to release equity on your retirement flat, then there are ways around it. For example, you might be able to move house and then release equity from that property.

Alternatively, you might choose to downsize your property in order to get your hands on some cash, although downsizing can be difficult when you are already living in a flat or apartment.

Some lenders need to ensure that your apartment or flat block has a lift in it, or will also need to have more than four floors. Some lenders will not lend to anyone who owns an ex-council flat, too.

According to the Financial Times [2], your lender might not qualify you for equity release in Newcastle-Upon-Tyne if your property is linked to a business or commercial enterprise, such as a B&B or hotel.

As highlighted above, it is not impossible to release equity from your home if you own and live in a retirement flat or apartment, but it is tricky. In order to ensure that you do qualify for equity release, preparation and insight is key.

This is why it is incredibly important to speak with an equity release advisor prior to applying for your equity release loan. Knowledge is often power, and when it comes to equity release, knowledge is money.

If you own a retirement apartment or flat and want to release equity from your home, then you will need to do your research. You should speak to an equity release advisor as soon as possible, so that you are in the best position to apply for a loan [2].

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What Are The Qualification Criteria for Equity Release in Newcastle-Upon-Tyne?

There are several different qualification criteria and factors when it comes to equity release in Newcastle-Upon-Tyne. The Equity Release Council [3] are fantastic at ensuring that all lenders and advisors stick to these criteria factors.

1. Your Age

To qualify for equity release in Newcastle-Upon-Tyne you will need to be aged at least 55 years old. In fact, when it comes to equity release in Newcastle-Upon-Tyne, the older you are then the more money you are able to release from your home.

In fact, there are now a number of lenders who only allow those aged over 60 years old to release any equity from their home.

If you are applying for equity release in Newcastle-Upon-Tyne with someone else as a joint application, then the younger of the two people must also be aged over 55 years old.

It is really important to understand that how much equity you can release will be based on how old you are, and lenders and equity release advisers will use their equity release calculator to work this out.

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2. Where you live

It is important to understand that your age is not the only prerequisite when it comes to equity release in Newcastle-Upon-Tyne.

In fact, lenders will also look at your location when it comes to equity release in Newcastle-Upon-Tyne.

Lenders will set their own standards for where you must live and what kind of property you must live in in order to qualify for equity release in Newcastle-Upon-Tyne.

However, the general consensus is that if you live on the mainland UK and are aged 55 or over then you will be allowed to release equity from your home. However, if you live in Northern Ireland then things might prove to be a little trickier, as there are currently only two lenders in Northern Ireland.

In addition to this, if you live on an island off of the UK, such as the Isle of Man then you might not be able to release equity from your home.

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3. The value of your home

In order to qualify for equity release in Newcastle-Upon-Tyne, you must own your own home in the UK that is worth a minimum of £70,000.

When you apply for equity release in Newcastle-Upon-Tyne, you will need to make sure that the lender carries out a valuation on your property.

This is so that they have a true and up to date estimate on how much your property is worth, which will then inform them on how much equity you are able to release from your home.

The valuer will look into the general condition of your home, as well as the location and how much property has increased in value in your local area recently.

There is no maximum value when it comes to equity release in Newcastle-Upon-Tyne. However, if your house is valued at more than one million pounds, then you will have to choose a large provider to deal with your application.

If you are seriously considering equity release in Newcastle-Upon-Tyne then you will need to speak to an equity release advisor for the very best information and advice going forward.

Start your equity release journey by getting in touch with our team at Equity Release Warehouse. Our fully qualified and professional advisors are on hand to help you through the process from start to finish.

Our advisors will never put pressure on you to make a decision, they are simply on hand to inform and advise you on equity release plans available to you.

They will also use our very own equity release calculator to work out exactly how much equity you are able to release, and will even draw up your own mortgage illustration so that you see and understand exactly what you are signing up to.

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References

[1] https://www.telegraph.co.uk/financial-services/retirement-solutions/equity-release-service/do-you-pay-tax-on-equity-release/

[2] https://www.ft.com/content/0128fea7-33a2-4c21-b8a6-5e999d2ff22e

[3] https://www.equityreleasecouncil.com/what-is-equity-release/

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