I always use checklists when making a decision or organising anything. I made a great big spread sheet when arranging our wedding. It all went off really well. Here’s my checklist for you regarding Equity-Release:
Get independent legal advice. Choose a solicitor experienced in this type of work and make sure that you find him or her easy to understand and trustworthy. Find out how much they will charge and either get a fixed quote or at least an estimate for the work involved.
Communicate with your family. Include your family, especially your children or any beneficiaries, in your decision process. Do this at an early stage so things do not come as a shock to them and they can consider all the ramifications, too. It would be wise to inform anyone in your Will that their inheritance may be reduced and your executors should be informed as well, if possible.
Get advice from a trustworthy source. See the article about different types of Financial Advisor. Check them out and try to get a recommendation if at all possible. Ask the questions about how many product providers they deal with and how much experience they have in this specialist field.
Consider carefully how to borrow. The easiest way of keeping costs down is to only use Equity-Release as much as you need. Work out how much you need vary carefully and go for a plan that allows you to draw more funds if needed. This can save a great deal even if you do eventually take the funds.
Don’t choose just on interest rate. There are various ways in which charges are calculated and the rate of interest is only one of them. Also consider questions like is the plan covered by SHIP? Can you borrow more if needed? How about regulation by the FSA? What guarantees do you have about retaining the right to live in the property for life? Could you move to a new house if you wished?
Don’t forget about benefits. Your means tested benefits might be affected if you income and / or cash savings go up. Get to grips with how your benefits will be affected and make a careful equation between that and your overall financial needs.
Consider the alternatives to Equity-Release. You could realise assets from elsewhere, move to a smaller, more suitable home, get home improvement grants and make sure that you are getting all of the benefits that you are entitled to. See Alternatives to Equity-Release for a detailed list to consider.
There are more things to consider but this is a good starting point. Remember what I said about making a list – start one now and keep adding to it every time a thought crosses your mind and you should start to build a concise list of points to weigh up.
Please contact me by email or telephone if you wish.
Kind regards,
John Higgins