What you need to know about equity release

Published: 05/11/2019 By Martin Card

Equity release is a topic within financial services that is often perceived by clients and professionals as a taboo subject. However, for the right people and the right circumstances equity release can be a lifeline.

House prices in Surrey mean equity release is becoming more common as residents are realising they are asset rich but cash poor. We have seen a dramatic increase in enquiries from people with varied reasons for wishing to release equity from their property.

Our job as qualified equity release advisors and members of the Equity Release Council is to ensure that clients and their families are advised appropriately. We like to meet clients and their families in their homes in and around Surrey and London to ensure that they are relaxed, their family can understand the implications of any action that may be taken in the future. We like to leave the conversation with the family for further discussion in our absence before arranging a follow up meeting.

Equity release case studies

Case study one 

The increasing cost of care in Surrey means the finances of many are being stretched when looking to provide care for the longer term. We have recently been appointed by an Attorney to advise on releasing equity from their relative’s property so that care at home can continue to be provided.

The person receiving care has no wish to leave their home but of course the cost of care is not insignificant. After careful research and conversations, it was concluded that an equity release product that allows a series of withdrawals was suitable to pay for the cost of care and allow future drawdowns should the initial funds that were released run out.

Case study two
Increasingly with the value of property in Surrey we are coming across clients whose estate will have to pay inheritance tax on death. We were appointed by a client to look at the possibility to passing on wealth to future generations to reduce the estate’s inheritance tax liability immediately and in the future.

Located in the Surrey Hills our client’s property was worth a significant amount of money which exceeded all of their available allowances for inheritance tax purposes. We met with the family at their convenience to discuss how, perhaps, equity release could help reduce the value of their estate.

After our initial meeting the family was left to discuss the points raised during our meeting and a second meeting was subsequently arranged to discuss specific equity release products.

The actions taken by the family, in line with our advice, has resulted in a potential minimum saving of £200,000 in inheritance tax through equity release and other tax planning advice.

It is not just Surrey that has increasing property prices, London is becoming ever more expensive too. How are our children supposed to get on to the property ladder? In this final case study, we illustrate how we can use equity release to help younger generations get on to the property ladder.

Case study three

Our client’s child was looking to buy a property but simply could not save enough to put down a deposit. Through conversation we established that our client had significant equity in their property and had no intention of moving.

We discussed using an interest only equity release product to release a lump sum against the parents’ property. The lump sum was gifted to their child to allow them to put down a deposit on the property and agreement was put in place that the child would service the interest on that loan. This meant the debt against the parents’ estate did not increase.

The child then took out their own mortgage for the balance of the purchase price but the monthly cost of servicing the mortgage and the interest on the parents’ equity release was still cheaper than the cost of renting an equivalent property.

Should you wish to discuss releasing equity from your property, please get in contact for a free no obligation meeting.