Sunday, 15 March 2009

EQUITY RELEASE - IS IT FOR YOU? PART 3

Well, before you decide, think about it very carefully. A disadvantage is that you will have no (or very little) property value to leave your children. This could of course, be an advantage if you have so much property and wealth that you need to scale down the value of your inheritance to avoid inheritance tax.
Before you take equity release do your research - your chosen lender should belong to Safe Home Income Plans (Ship) a voluntary industry code that provides consumers with certain guarantees. Ship members explain benefits, obligations and limitations. Their plans also protect against customers ever owing more than the value of their home.
Discuss your plans with your children. It may be that, if you need cash, your children can pool their resources and buy you out of your house (at least partially) and then let you stay on living in it, of course! If this is done whilst you are fairly fit and "young" - it may be a great way to avoid having to sell your property some time in the future, should you need to fund permanent care in a nursing home. Other alternatives are an interest only mortgage or downsizing to a smaller house (sometimes difficult in a property slump).
Equity release can present you with a lump of cash, which may well then jeopardise your entitlement to some state benefits.
The Financial Services Authority (FSA) regulates lifetime mortgages but does not yet regulate home reversion plans.
More info at FSA or call 0845 6061234, Ship’s website (www.ship-ltd.org) or call 0870 2416060, www.helptheaged.org.uk or call 0808 8006565, and Age Concern.

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