Tag Archives: Equity Release Loan

Can I top-up my Equity Release Mortgage?

An equity release scheme works out to be the best option for many people who own a valuable property, and need additional cash but do not wish to sell the property. Equity release is fast becoming popular as a way to add to your income during retirement. Interest rates are very competitive today, and the market has some of the most flexible equity release schemes on offer. As such, this may be a good time to explore the option of an equity release loan on your property.

For those who already have an equity release scheme in place, it may still be a good idea to shop around for alternate equity release schemes for two possible reasons. One, it may be possible to get a more competitive mortgage and make significant savings by switching, and two, because you may have exhausted your existing loan and may need an additional loan.

Some lenders do offer top up loans on existing equity release plans. If you have had your existing equity release mortgage in place for more than five years, you may be eligible to apply for a top up. There are independent advisers who can give you advice on equity release top up loans, and alternate schemes.

Some equity release lenders charge early repayment penalties if you repay the loan earlier than a certain period of time. These penalties, if any, vary with each equity release scheme but may be quite high. However, more competitive terms of modern equity release schemes may mean that in spite of an ERC you could still stand to make savings by swapping your existing mortgage for a new one.

If you have had an equity release scheme and are considering shopping around for an alternate scheme, it may be advisable to seek the guidance of an independent financial expert. Independent advice is invaluable in matters such as financial loans, and many financial advisers also handle the entire process of dealing with your existing lender and setting up the new loan.

The internet has some good resources for equity release information and comparison. You can find companies that offer financial advice and information and there are equity release calculator tools available online which may help you get a rough idea of how much additional loan you are eligible to get. Online comparison sites are also useful for equity release comparison and to find the best equity release scheme available now.

Does Equity Release Affect Means Tested Benefits?

An equity release loan is a loan taken against the equity or value of a property. Thousands of people around the UK are home owners but do not have a sufficient income to support them during their retirement. An equity release loan allows such people to free up some of the equity tied into their property and use it either to boost their regular income or for a one off financial boost.

Equity release schemes have proved to be very popular as an increasing number of people opt for them. However, it is important to understand all the equity release pros and cons before taking a loan against your property. In order to do this, it is important to seek the advice of an independent financial expert who can provide objective advice about whether equity release is the right option for you.

One of the reasons people hesitate to opt for an equity release loan is that it could affect their means tested benefits such as pension credits, council tax benefits, or help with costs of care. People opt for pension equity release to supplement their income during retirement, but if getting one means losing your pension credits, it sort of defeats the entire purpose of getting one!

Releasing equity from your home may affect some means tested benefits, especially council tax benefits and pension credits; however, this is very much a matter of individual circumstances. In any case, only means tested benefits could be affected by an equity release loan, and not other benefits such as disability allowance or carers’ allowance.

It is worth mentioning here that there are two types of equity release loans – the more common type which is taken in regular installments and one which is taken as a lump sum. Loans which are taken for one off goals such as a holiday, home improvement works, etc. do not affect means tested benefits as they do not affect the overall income of the claimant.

In order to check whether taking out an equity release loan will affect your eligibility to claim pension credits or other forms of means tested benefits, it is important to consult an independent financial adviser who has expertise in the field of equity release schemes. This will help you understand whether an equity release loan is the right choice for you.