Dear Dean – Your questions answered
Do you have a question for our equity release expert, Dean Mirfin? Whether you’re wondering about the difference between a lifetime mortgage or a home reversion, or want to understand more about how drawdown plans work, pose your question to Dean here and view some of the most frequently asked questions.
Q. We have already taken out an equity release plan with Key; however we are now looking to move house. Are we still able to do this?
A. Yes. So long as your plan is provided by a member of SHIP (Safe Home Income Plans) then you can move your equity release plan over to your new home. This is subject to the new property being approved by your plan provider. We help lots of people do this and when you meet with an independent adviser they will be able to give you more information on ensuring you choose a plan with these guarantees.
Q. Will equity release affect my pension and state benefits?
A. Your basic state pension and personal pension will not be affected if you release money through a lifetime mortgage or home reversion plan. Some benefits, for example, Pension Credit, are means tested and without the right guidance, can be affected. Your adviser can provide you with more information on this by using Equibis, our unique benefits software to help provide the best solution for you.
Q. What will equity release cost me?
A. There will be one-off fees involved which vary from plan to plan. Some companies may refund some of the fees. Check what fees there are and what you and the equity release company are responsible for.
Q. What happens at the end of my plan? I don’t want to leave my children with any debts.
A. At the end of the plan, your home is sold in order to repay the plan provider. If your plan is SHIP-approved, then you will have a ‘no negative equity guarantee.’ This means that the outstanding amount will never exceed the value of your home, ensuring that your family are not left with any debts to pay.
Q. Why are interest rates so high in equity release?
A. Many people expect interest rates for equity release to follow the same trend as normal residential mortgages; however this is not the case due to the long term nature of the mortgage.
However, when a person takes out equity release on their home, the amount borrowed is only repaid when the person passes away or moves into long term care. As the provider has no way of knowing when this will be, they need to ensure they are able to fund products on a long-term basis for their customers.
Q. How much will I receive?
A. This depends on a number of factors such as your age, gender, the value of your property and even your health and lifestyle.
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.
If you would like to ask Dean a question please complete the form below:
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