Dear Dean

Dean Mirfin, our resident financial expert, has selected two of your most frequently asked equity release questions…

Q. Is my health taken into account with equity release? I’m concerned that my health could affect the amount I could release, or that I might not be able to take a plan at all.

A. The good news is that some plan providers offer enhanced terms for people living with certain health conditions. So rather than be penalised for your health, you could actually receive better terms on your plan. That’s part of the reason why Key have been selected by charities such as Diabetes UK and the British Cardiac Patients Association, to help their members get the best equity release deal.

Key now have exclusive access to the new enhanced lifetime mortgage provided by more 2 life.

This plan has been specially designed to take a person’s health and lifestyle into account when their equity release offer is calculated. This can often mean that you could release more money with this plan than with one where your health was not considered.

An extra feature of this plan allows you to safeguard an inheritance for your loved ones with the ‘protected equity guarantee’. By only taking a share of the funds available to you, you can protect a share of your property to be guaranteed as an inheritance.

Remember that at Key, we search the market for every customer, so we’ll always take all your circumstances into account before we recommend any plan to you, which may or may not be one with enhanced features.

Q. How will equity release affect my Pension Credit?

A. With Pension Credit, the important point to be aware of is that you’re allowed to have savings of up to £10,000 before there’s any potential effect.

If savings exceed this, there could potentially still be no effect depending on what the equity release is used for. With drawdown plans you could take £10,000 to start with and once that’s been spent, return for a further sum but still keep below the £10,000 threshold. If you exceed this, the Pension Service will ignore capital earmarked for a particular expense if it is deemed ‘reasonable in the circumstances’ such as replacing a car – so long as it’s not a Rolls Royce!

In addition, if the money is being used to repay debt, this will again be ignored as well as certain expenditure for maintenance to the home.

Benefit entitlement is very complex, so it’s worth getting specialist advice. Remember, all Key advisers have access to our unique benefits software to calculate any potential effect on benefits before you go ahead with a plan. That’s one more good reason to call Key if you’re considering equity release.

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