We’re going to be offering up a series of longer articles with business people in and around Mansfield.
So, some Sunday morning reading for you and it is all about equity release and the question – does it deserve a bad rep?
Historically, it is fair to say that equity release has had a bad name. And so given the historical bad press, it’s not surprising that many people shy away from the idea of using it.
But Holly Hensleigh, an equity release adviser based in Mansfield, says things have changed in recent times, and says that it can be a useful planning tool.
We caught up with Holly (pictured) to talk about her work.
Holly Hensleigh (CertLTCP CeRER CeMAP CeLTCI CeRGI PGDip LLB (hons) has worked in equity release since 2013 and has access to the whole of the market.
‘Useful financial planning tool’
Her career history has included working with the UK’s leading debt advice charity helping clients to use equity release to improve their overall financial situation.
And so she tells us that since regulation in 2005, equity release can be a very useful financial planning tool.
Holly says: “There are examples in Nottinghamshire of a 9,780% growth in property value since purchase in the 60s. With this staggering return on investment, why not allow some of this growth to work for you.
“There has been vast market growth for Equity Release over the last 20 years with a 500% uplift of consumers from 2011 to 2021.
“This has led to evolution of products and introduction of household names into the market, most recently Royal London and Standard Life. Equity release is much more secure and is likely to surprise you as to how flexible it can now be.”
But doesn’t equity release mean giving up ownership of your home, losing an element of control and also the inheritance for your beneficiaries?
Holly replies: “Since the introduction of lifetime mortgages, you can retain full ownership with simply a mortgage charge. A lifetime mortgage is repaid when the last of the owners passes away or moves into care.
“Up until this time, the lender will charge you interest and there are many new options on how this interest can be managed. You can pay the interest monthly which maintains the debt at the amount borrowed, you can make payments towards the balance or allow the debt to grow.”
And what about the issue of being left with a bill due to negative equity?
‘No negative equity guarantee’
“Historical equity release ‘horror stories’ have accurately told how beneficiaries can be left with a bill to pay where the balance of the equity release exceeds the property value,” says Holly. “This can no longer happen since the introduction of the ‘no negative equity guarantee’.
“Regardless of the balance owing on the equity release and the value of the property, a debt can never be left to your estate and beneficiaries.”
What about any other measures to give people confidence?
Holly says: “There are many other safeguards which are now included as a standard such as the option to port the equity release to a new property, a fixed interest rate for life and guaranteed lifetime occupancy in your home.
“A fixed interest rate for life means that you are aware from the outset exactly how much the interest will be. If you decide to pay the interest monthly, you know that the payment will never change in your lifetime.
“Alternatively, allowing the debt to grow with the interest will mean you have an accurate year on year projection as to how the debt will grow. With inheritance protection features you can ensure that a specific amount is left to your beneficiaries.”
What can a lifetime mortgage be used for?
“Many different reasons,” says Holly. “Repaying a mortgage, paying for care, repaying debts, home adaptations and improvements, top-up income, gifting to family, tax planning and much more. Lifetime mortgages can also be used to raise capital to facilitate a divorce buy out.
“A lifetime mortgage is not usually affordability-based and therefore is a good solution for those falling short of standard mortgage affordability requirements. You are still able to make payments very much like a standard mortgage.
‘Speak to a qualified, regulated adviser to look at your options’
“There is no one size fits all with equity release and it is important to speak to a qualified, regulated adviser to look at your options.
“Many brokers will offer a free consultation to determine whether equity release is appropriate for you. Any broker that you seek advice from should be regulated by the Financial Conduct Authority and a member of the Equity Release Council.”
Interesting stuff from Holly, don’t you think?
If you are wanting to get in touch with Holly, email her using holly@veracityfp.co.uk.
*Equity Release from your home will be secured against it. Equity Release may affect your choice and ability to pay for your own long-term care, potential inheritance and your entitlement to means-tested benefits both now and in the future. Speak to an adviser for a personalised illustration.