UNLOCK THE CASH FROM YOUR HOME IN ASSOCIATION WITH KEY RETIREMENT BY JAMES CONEY

UNLOCK THE CASH FROM YOUR HOME IN ASSOCIATION WITH KEY RETIREMENT BY JAMES CONEY

CONTENTS 01 SHOULD YOU FREE UP CASH IN YOUR HOME? 02 WHAT TO CONSIDER 03 BACK TO BASICS 04 YOUR FAMILY 05 HEALTH AND INHERITANCE 06 POPULAR USES OF EQUITY RELEASE 07 WHAT ARE MY OPTIONS? 08 TAKING A VIEW ON HOUSE PRICES 09 SHOULD YOU THINK ABOUT TAKING A NEW DEAL? 10 ANSWERING YOUR QUESTIONS 11 GETTING THE BEST ADVICE 12 YOUR WILL AND LEGAL HELP 13 NEXT STEPS ABOUT THE AUTHOR James Coney is one of Britain s most respected personal finance authors. He is editor of Money Mail and has been reporting on money issues for more than a decade. An award-winning journalist, he is a campaigner for the over-50s and a specialist in saving and retirement planning. Copyright Daily Mail 2015. The information in this guide is correct at June 2015, based on our understanding of the laws in England and Wales. The Daily Mail and Key Retirement accept no liability for decisions taken on the sole basis of this information and would always recommend you take personal advice. UNLOCK THE CASH FROM YOUR HOME 3

01 SHOULD YOU FREE UP CASH IN YOUR HOME? IF you re planning your retirement then you ve never had more choice about how to spend the money you ve built up in your pension fund. In April 2015 the so-called pensions revolution finally began landmark rules which allow every retiree to spend their life savings as they wish, without having to take out an annuity, which pays an income for life. No longer are pensioners limited to just one source of income and they can dip into their life savings as they wish. On top of this the way we pay for care is also going through an upheaval. This changing landscape affects everyone, regardless of whether they have retired already, or have years until they can finally draw their pension. But despite these radical reforms it is still a tough time for pensioners. There remains an income crisis, with many struggling to get a good return on their life savings because of low interest rates. On a positive note, if you ve owned your home for a number of years, it s likely to be worth more than you paid for it. According to Nationwide, house prices have more than tripled in the last 20 years. The total property wealth of the over-65s is now 861 billion and almost 4.7 million own their home outright #. Retired homeowners saw the equity in their home climb by 7,117 on average in the final six months of 2014 and more than 17,000 on average over the past five years #. It s little wonder, then, that so many are looking to the roof over their heads as a way of boosting their retirement finances. Property can be as much a part of the wealth you ve built up over the years as a pension or savings. You can use your own bricks and mortar as a way of getting the most out of your retirement, helping yourself out of a financial headache or assisting a loved one. Equity release, which allows homeowners aged over 55 to release cash from their homes while enabling them to still live in them, could be an option for you too. According to the Equity Release Council, last year more than 21,000 people took out a new equity release plan. It s a way of raising much-needed funds to help give that extra quality of life in retirement. It can also be worth considering if you want to take a holiday of a lifetime, need the cash for doing up your home, or are scared about your pension meeting your day-to-day living costs. This is particularly the case for those approaching retirement who have mortgages which were on interest-only but will not be repaid by the time they retire. And increasing numbers of retirees are using the cash in their home to give a hand to children and grandchildren. Many of the younger generation struggle to get on the property ladder, or are lumbered with university debts, and so those with equity built up are increasingly trying to help. According to Key Retirement, around one in four people who used equity release wanted to help family and friends*. On top of this it can reduce the inheritance tax burden on your estate and also allow you to share in the delight of being able to help the next generation. Some people are uneasy about equity release it s certainly a significant financial decision to make. They fear it is too complicated. Choosing whether to release equity from your home can be a hard decision to make. Certain plans have features which allow you to take money when you need it, receive bigger sums if you have health problems, # Key Retirement s interpretation of ONS data Aug 14-Feb 15 *Key Retirement Equity Release Market Monitor Q1 2015 or even ring-fence some of the value in your home to ensure an inheritance for your beneficiaries. This guide will answer any questions you might have. It also helps you find the best specialist, independent advice which is vital when you are taking out equity release. At the end you ll have the information you need to be able to make the decision that is best for you. 4 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 5

02 WHAT TO CONSIDER DESPITE the growing number of people using equity release, that doesn t mean it will suit your personal circumstances. For many, the big attraction of equity release is that it allows you to live in your property as long as you want. Plans are flexible and the interest rates are competitive. If you need to raise cash, you must make sure you have weighed up all the options before deciding on equity release. You could sell your home and move to somewhere smaller and cheaper. But moving can be expensive there are estate agents fees, solicitors fees, removal costs and stamp duty to consider. And many people are reluctant to move away from friends and neighbours, or from the family home. If you need money for a new boiler or to adapt your home for disabled living, you may be able to get help from your energy company or the local council. You must also consider whether you need money now, or in stages. If you have debts to pay, want to gift some money to a loved one, or even want to take a holiday of a lifetime, then a cash lump sum may be what you need. Many people have seen their savings dwindle and need to top up their income. In this case an equity release plan which allows you to generate cash injections may be right for you. Whatever your needs and priorities, this guide is designed to help you understand some of your options, but it is not a substitute for getting the right advice. Choosing the right independent specialist advice is a key part of the process. To help you decide, you may want to speak to family and friends, as they can provide valuable support. FOR MANY, THE BIG ATTRACTION OF EQUITY RELEASE IS THAT IT ALLOWS YOU TO LIVE IN YOUR PROPERTY AS LONG AS YOU WANT 6 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 7

04 YOUR FAMILY 03 BACK TO BASICS YOU may not have discussed inheritance with your family or beneficiaries, but it is likely to be something they and you have thought about. Talking about money can be a difficult issue for families. Many people believe it is a private matter and don t like the feeling that someone is prying into their affairs. And withdrawing cash from your home today will reduce the value of any future inheritance. For these reasons, equity release can be a sensitive subject. But whatever your worries, it is worth getting your loved ones involved now even if the end goal is actually to give some of the cash to them. The decisions you make today are likely to affect them in the future. Discussing things will help you make the right decision, and families are usually very supportive. Most will really appreciate being included. They may not even realise that you need the money and it may be that they can help to suggest other alternatives, or solutions which work with equity release. Specialist equity release advisers will encourage you to include your family. They know it can be a tricky process for all of you and involving your family now can help to avoid misunderstandings in the future. Besides, having a second pair of eyes and ears to look over documents and ask questions you may not have thought of can be very useful indeed. A good adviser will also encourage family or friends to attend appointments. So use this guide as a starting point for discussion. If you have included your loved ones from the beginning, you can be confident you will make the right decision in the end. SO how does equity release actually work? Well, it s a bit like an ordinary mortgage, only you typically won t need to make regular repayments. And instead of getting money to buy a house, an equity release lender gives you a chunk of money which you will have complete freedom to spend on whatever you wish. You can decide to receive the money in the form of a cash lump sum or withdraw the cash in stages, depending on what type of scheme you choose. If you have a mortgage already, this doesn t need to be a barrier. But the proceeds of any equity release must be used to clear the current mortgage first, which will reduce the total sum left over. This is becoming increasingly popular. What you can get from your home will depend on how old you are. The younger you are, the less you will be able to release. To be able to qualify for equity release you must, generally, fulfil the following criteria: You must be aged 55 or over; You must own your own home; Your home must be worth at least 60,000 and be in a good state of repair; You must live in the United Kingdom; You must not live in a non-standard home such as a park home, or local authority flats where the majority of the block is still social housing. 8 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 9

05 HEALTH AND INHERITANCE WHILE the amount you can release from an equity release plan depends on your age and property value, your health and lifestyle are also important factors. With some financial products you may feel penalised if you have certain health conditions; with equity release, it can work to your advantage. You may be able to qualify for an enhanced plan which could see you releasing more from your property than someone of the same age with perfect health. At some point most of us will suffer from ill health. You may have an existing medical condition and many people make lifestyle choices such as smoking. Anything that affects your life expectancy and serious conditions such as cancer, diabetes, heart disease, Parkinson s disease and strokes mean you can be considered for enhanced products. Again, a good specialist adviser will ask you about this and be able to give you details. INHERITANCE Any equity release plan will reduce the overall sum you can leave to your beneficiaries. In the past, this has put off some people who like to know how much their family will inherit. But in recent years pensioners who have large amounts of cash in their homes have been releasing money to give as gifts to their families. Latest figures show that 26 per cent of all the cash released from homes was used to treat family and friends (Key Retirement Equity Release Market Monitor Q1 2015). Many elderly relatives just want to see their loved ones enjoying their inheritance. How much impact equity release will have on your estate largely depends on what type of plan you arrange, and how long you stay in your home. But some equity release plans do allow you to guarantee a proportion of your home s value as an inheritance. This is called protected equity and is available on some lifetime mortgage plans. With this option you can decide not to take the maximum available to you. You could guarantee, for instance, that at least 20 per cent of your home s value when it is sold will go to your estate. In this example, you would also IS EQUITY RELEASE SAFE? The sale of equity release is fully regulated by the Financial Conduct Authority (FCA). Advisers must follow strict rules to ensure it is suitable, and the FCA keeps a record of all approved firms. A good specialist independent adviser should always discuss other options with you. And if you have a dispute with your adviser, you have the added protection of the Financial Ombudsman Service. This is an independent body have an assurance that the amount repaid to the lender would never exceed 80 per cent of your home s value. And most importantly, all Equity Release Council approved plans come with a guarantee that the sum you owe will never be greater than the value of your home. which can look into disputes between consumers and financial companies. Anyone looking at equity release should ensure the plan they choose comes with the following guarantees: A no negative equity guarantee, so you can never owe more than the value of your home. The right to remain in your home for as long as you choose. The freedom to move to another property, without financial penalty (subject to provider criteria). 10 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 11

06 POPULAR USES OF EQUITY RELEASE 07 WHAT ARE MY OPTIONS? You can spend the money released however you like. According to Key Retirement, popular uses include: Home and/or garden improvements 61% Pay debts (e.g. loans, credit cards) 31% Go on holiday 28% *While home and/or garden improvements consistently retains top spot for uses of equity release, there has been a marked increase in those utilising the funds in their home to repay unsecured debt. This has been the most significant increase for any area, increasing from 26 per cent for the first quarter of 2014 to 31 per cent for the same period of 2015. While repayment of unsecured debt is the most significant increase, it is worth noting that mortgage repayment has continued to increase year on year, from 21 per cent for the first quarter of 2014 up to 23 per cent for the same period in 2015. This is believed, in part, to have been fuelled by interest-only mortgage problems, which are on the rise. Think carefully before securing other debts against your home. * Key Retirement Equity Release Market Monitor Quarter 1 2015 Help with regular bills 14% Clear outstanding mortgage 23% Treat or help family or friends 26% UNTIL now, we have considered why equity release can help you. So, let s have a look at how it works. USING A LIFETIME MORTGAGE This is the most popular form of equity release plan. When you take one of these out, a lender agrees how much you can borrow overall. This will depend on your age and health, as well as the property s value. A 65-year-old could typically borrow up to 38.5 per cent of the value of his or her home. An 80-yearold could typically borrow up to 50.5 per cent. Unlike a regular mortgage, you don t have to make monthly repayments though some people do choose to. Interest accrues on the lifetime mortgage at a fixed rate every month. Normally, the loan plus interest is repaid when your property is sold. This might be on your death, on the death of a surviving partner, or if you permanently leave your home to go into long-term care. You have the option to repay the loan early; however, early repayment charges may apply. How much is left for your beneficiaries after your house is sold and the total debt to be repaid will depend on what has happened to house prices. But even if house prices tumble, with plans approved by the Equity Release Council, you can rest assured that you will never have to repay more than the value of your home. Another real benefit of lifetime mortgages is that you will be able to live in your home and will still be the legal owner of it. 12 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 13

HOW TO USE YOUR LIFETIME MORTGAGE There is one key decision you need to make when taking a lifetime mortgage and that is how you would like the cash you are releasing. You can either take it all in one lump sum, or you can draw down chunks of it as and when you need it. Currently the most popular option is this latter one called drawdown accounting for around 66 per cent of equity release plans taken out last year, according to the Equity Release Council. You can draw down the money in stages, as and when you need it. A lender agrees to an overall sum of money you can borrow, which is set aside for you. You can take an initial slice (subject to a minimum amount), then come back whenever you decide to draw more. It s not like a cash machine, though. You can t take a tenner here, and a tenner there. Usually there is a minimum sum you must take for further withdrawals for example, 5,000 so it s important to have an idea at the start and seek impartial advice. The reason so many people choose this option is because it can work out cheaper than taking the money in one go. You only pay interest on the cash you have taken not the total amount which is available to you. This means interest accrues on smaller amounts of borrowing. And, of course, less interest means a saving for you and more money for your estate. SO WHAT HAPPENS IF I TAKE A LUMP SUM? With the cost savings and the flexibility you get by taking money as drawdown, it is easy to see why taking a lump sum is not as popular. You take an agreed single tax-free cash lump sum. It may be possible to release further money if available, but you will need to go through the application process again. Interest accrues on the lump sum immediately but is not repaid until your property is sold. As you take your money in one go, it means this option could work out more expensively than a drawdown mortgage. A specialist adviser will take the time to calculate the financial differences between the two. INTEREST PAYMENT PLANS There is a type of lifetime mortgage where you do pay interest every month and this is called an interest payment plan. You are given the money freed up from your home and then pay the interest on your borrowing every month. These types of plans are becoming popular with homeowners who hit retirement and have an interest-only mortgage they cannot repay. This could be because of an investment, such as an endowment, that has failed to pay out as much as hoped, or because tough new bank rules prevent them from getting a new mortgage deal. Some have also been left unable to afford their existing mortgage because their pension was not as high as hoped. Before deciding on an interest payment plan, you need to look carefully at your income. Do you have a regular stream of income that will allow you BY PAYING OFF INTEREST DURING THE PLAN TERM, YOU PAY LESS AT THE END 14 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 15

to a company in exchange for a cash lump sum. Essentially, the ownership of some or all of the property reverts to the reversion company. Again, the older you are, the more you will be able to release with a reversion plan. You won t get the full current market value of your house, because, as part of the exchange, the reversion company is giving you the right to remain in your home rent free. They ll grant you a lifetime lease for your property, so you will be able to live in your home as long as you wish. You may want to retain ownership of some of the house to pass on to a loved one. When you die or go into care, the reversion company gets its share of the property, based on the sale price. So, say, for example, you sold half of your house to the reversion company, the proceeds of the sale would be split 50:50 between the reversion company and your estate. One appeal of home reversion is that you know exactly what proportion of your home is yours. If the house doubles in value, so will your share. But one disadvantage is that you are also giving up a share of this house price growth. These deals can be hard to reverse, as you are selling part of your house. A further point to consider is that if you pass away soon after taking out the plan, you will have effectively sold your home cheaply. EXAMPLE CASE STUDY to cover the costs of the interest and still have a comfortable lifestyle? An increasingly popular option with people who choose interest payment plans is to just repay part of the interest every month. For example, someone who released 72,065 might decide paying 100 per cent of the interest is going to be a stretch, so instead decide that paying 50 per cent is a more manageable monthly sum. Monthly payments are subject to a minimum. This means that every month the remaining 50 per cent of interest they don t pay is added to their money that will have to be repaid when their property is sold. If for any reason you do struggle to meet repayments, this can often be converted to a standard lifetime mortgage with interest only payable at the end. But this can sometimes also incur a penalty charge. REVERSION PLANS These schemes operate in a completely different way to the lifetime mortgages that we have just been considering. With a reversion plan you sell all or part of your home Tony and Jane s story TONY and Jane Booth, from the Midlands, are both 68 and have lived in the same home for 20 years; it is now worth 215,000. They want to replace their kitchen and buy a new car. They also spend lots of time with their four granddaughters and really want to take them to Disneyland Paris. They raise 36,000 to spend now and also can protect 50 per cent of the value of their property, so they can pass on a legacy to their grandchildren. POSED BY MODELS 16 UNLOCK THE CASH FROM YOUR HOME 17 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 17

08 TAKING A VIEW ON HOUSE PRICES YOU really need to consider the impact of house prices and how those may affect any inheritance you want to be passed on. In the past, property values have climbed steeply. The average price of a UK property has more than tripled in the last 20 years, according to the Nationwide House Price Index. And you need to have a view on what you think may happen in the future, and understand how this will affect the inheritance you may want to leave. If prices do increase, you may build up more equity to leave your loved ones, even after the loan is repaid. If they don t, then you may have to prepare your family for the fact they will have little or no inheritance. This is why you need to ensure you seek specialist advice and take out a scheme only through a company that carries certain guarantees. You can find out more about these guarantees on page 11. HERE IS AN EXAMPLE OF HOW A LIFETIME MORTGAGE, THE MOST POPULAR TYPE OF PLAN, WORKS: = 272,191 Property value = 316,005 15 years later EQUITY 200,126 MORTGAGE 72,065 HOUSE PRICE INFLATION OF 1% EQUITY 143,052 MORTGAGE (LOAN + ACCUMULATED INTEREST) 172,953 Lifetime mortgage: please note that this is only an example and the value of your house could go down or not increase at the same rate. A good adviser will always ensure that there is a no-negative-equity provision. SO HOW DO HOUSE PRICES AFFECT EQUITY RELEASE? Let s look at lifetime mortgages. Imagine a house worth 272,191, owned by a couple with youngest age of 71, a mortgage interest rate of 6.01 per cent and an advance of 72,065. If the house price went up by one per cent a year over 15 years, then the property would be worth 316,005. When the house is sold, how much your estate will get is based on how much equity is left after the interest and loan has been repaid to the lender. In this case, the interest plus the original loan is 172,953. This leaves 143,052 for you or your estate. If house prices were to fall, the amount owed would remain the same. It would be your home s value that determined how much your estate would receive. With an interest payment plan, if you pay all the interest, the amount you owe will always be the same as you borrowed. 18 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 19

09 SHOULD YOU THINK ABOUT TAKING A NEW DEAL? REAL-LIFE CASE STUDY JUST as with ordinary mortgages, the interest rates for lifetime mortgages go up and down, depending on what happens in the economy. Once taken, the rate is fixed for the lifetime of the loan. So, at the moment, interest rates for lifetime mortgages have been falling so much so, that rates are now at their lowest for ten years (excluding interest payment plans). Most equity release plans have early repayment charges, which means that there will be a cost to move to a new deal. However, even though this is the case, it s worth investigating if you could save money and re-broke your equity release deal if you already have one. If you moved to a cheaper deal, it s possible you could save your estate thousands of pounds over the term of the mortgage. The sums are complicated, so it is worth speaking to a specialist to figure out whether it would be worthwhile. Essentially, it involves making the same calculations as when you first took out an equity release loan. A specialist adviser will have to look at your age, health and the current value of the home. It will be like taking out equity release all over again, only this time you need it to cover the money you have already borrowed, plus any early repayment charges. There may also be up-front costs to pay, as there were when the plan was initially arranged. David and Rosalind s story DAVID and Rosalind Davies first took out equity release on their three-bedroom detached home in Purley on Thames in 2008. Their home is worth 620,000 and, realising they were asset rich and cash poor, the couple used equity release as a way to make their financial situation more comfortable. Their two daughters suggested the idea originally and were supportive. One year after moving into the property, they released 55,000 from its worth to pay for upkeep of their boat and to buy a new car, a Jaguar XS. But rates have fallen substantially since they took that deal and so they decided it may be worthwhile seeing if they could get a cheaper loan and release more funds to pay for home improvements. Earlier this year they re-brokered their deal to get a much better rate and after paying off their original loan, borrowed more money to pave over their gravel drive to make it more accessible for Rosalind, 75, who has started suffering mobility problems. Former firefighter David, 76, says: It s proved an excellent way of getting a bit of extra cash. Our daughters said to us; Why don t you try equity release?, so it was their idea and they really don t mind. Of course we don t mind because it ll be repaid when the house is sold, after we ve gone. We ve got a boat on the Thames so the first time around we used the money to upgrade it, and paid for general day-to-day things, as well as treating ourselves to a new car. This time we ve used the money as more of a necessity to pave over the drive to make it easier to move a wheelchair through there. It s been excellent. 20 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 21

10 ANSWERING YOUR QUESTIONS Is equity release safe? Equity release advice is fully regulated by the Financial Conduct Authority (FCA), ensuring all advisers follow strict rules and guidelines, with the FCA keeping a record of all approved firms. Will I still own my home? Yes if you take out a lifetime mortgage. But with a home reversion plan, the reversion company will own all or part of the property, although you can live in it the rest of your life. Will I be able to move house? Yes, a plan can be transferred to a new home, as long as the new property provides acceptable security for the plan. Can I take equity release if I already have a mortgage? Usually, yes. You will first have to use the money you release to pay off the mortgage. What s the main difference between a reversion plan and a lifetime mortgage? The crucial difference is that with a lifetime mortgage you keep ownership of your home; with a reversion, you sell all or part of your home to another company and are, essentially, living as a rent-free tenant. How much money will I get from equity release? This is going to depend on your age, how much your home is worth, and your health and lifestyle. On top of this, it will depend on how much of your home you are willing to sell or mortgage. Some companies also have different rules. An independent specialist adviser will be able to look at every company and find the best deal for you. Will I have to make monthly repayments? Typically, no, the interest on a lifetime mortgage rolls up every month at a fixed rate. It is then repaid when your house is sold on death, or if you go in to long-term care. What happens when I die? Your house is sold and the equity release company takes its money from the sale proceeds. With lifetime mortgages this will be the amount originally borrowed plus any interest which has accrued. If you have a reversion plan, the reversion company will sell the property, take their percentage and pass the rest to your estate. What happens if my spouse dies? You can stay in the house as long as you wish. What if I need to go into long-term care? Your spouse can stay in the home as long as he or she likes. If you are widowed or single, your home would be sold and the sale proceeds would be used to pay the equity release company. Can I guarantee what inheritance I will leave? Yes. With a reversion plan you know precisely what percentage of the sale price of your home your estate will get. With some lifetime mortgages you can also protect some of the equity in your home to ensure that your estate is left with a certain value of the sale proceeds of your home (see page 10 for further details). Will my benefits be affected? They may be. This is why it is vital to consult an independent specialist A GOOD INDEPENDENT SPECIALIST ADVISER SHOULD WEIGH UP ALL YOUR OPTIONS 22 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 23

adviser who will take this into consideration (see opposite). Do I have to take advice? Yes. This is a huge financial decision, which will not only affect you, but your beneficiaries. It is important to have an independent specialist adviser. The next chapter will help you do this. 11 GETTING THE BEST ADVICE YOUR BENEFITS Raising cash from your home can affect your means-tested benefits. A good adviser will know this, and help you decide whether the money raised from equity release will offset any possible loss of means-tested benefits or help from a local council. A specialist adviser in equity release should be able to check whether there are other ways to increase your income, by claiming extra state help and support you are entitled to. State help can include: Extra income. It may be that you are entitled to Pension Credit. If you have a disability, care needs or extra housing costs, you may also be able to apply. Those aged over 65 may also be able to claim Savings Credit. Council Tax Benefit. People on low incomes and with little or no savings might be able to get help with Council Tax from their local authority. Help for your home. There is a range of grants and low-cost loans which help with maintenance and improvements your home may require particularly if you need to have it adapted in some way. Energy companies and local councils may also offer help with insulation and fuel costs. Care needs. If you need help at home with care or mobility needs, a local authority will look at the amount of savings you have when assessing what it will provide and how much you should pay. This is a very complicated area. The value of your home is disregarded while you live there. REMEMBER, YOU MAY BE ABLE TO GET HELP FROM THE GOVERNMENT IF YOU HAVE CARE NEEDS OR VERY LIMITED INCOME. YOU MAY EVEN GET MONEY OFF YOUR COUNCIL TAX BY now you have probably decided whether equity release could be right for you. If you want to progress to the next step, it s essential to find a good specialist independent adviser. Taking equity release is a big commitment. It s likely to be one of the most significant financial decisions you will make in your life, and can be difficult or costly to reverse. You will need to choose what type of plan you want to take, and how much you want to borrow. Getting specialist advice before you progress is the only way to be certain you have investigated every possible option. And as we have seen, not all plans are the same. So, how do you find a good adviser? It can be daunting, but the crucial thing to remember is that you are under no obligation when you see an adviser to proceed with equity release. So there is no harm in finding out what it could offer you. There are three types of advisers. One type are called tied advisers, which means they can sell only the plans that are on offer from one provider usually a big insurance company or mortgage provider. Then there are multi-tied advisers. These can sell equity release plans from a range of providers, but not from the whole market. The third type is an independent adviser. These are considered the gold standard of 24 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 25

12 YOUR WILL AND LEGAL HELP advisers, as they are not restricted in their choices. They have a duty to search across the market and to help you decide which equity release plan if any is right for your particular personal circumstances. You will usually have to pay a fee for specialist advice, but only if you proceed with the plan. Don t be put off by this, as it could end up saving your estate thousands of pounds if the adviser recommends the right product for you. Picking an independent adviser is a good start, but you should also check their qualifications and only pick one who specialises in equity release. YOU MUST BE SHOWN A DOCUMENT SHOWING WHAT TYPE OF ADVISER THEY ARE Key professional qualifications you should look for are a Chartered Insurance Institute Certificate in Equity Release, or the IFS School of Finance Certificate in Regulated Equity Release. Some things you may want to ask the adviser are: how much of their business is equity release? What qualifications do they have? How long has the firm been trading? Are they part of a reputable trade body, such as Specialist Advisers For Equity Release (SAFER)? Whatever the status of the adviser you choose, they must tell you what type of adviser they are, and how you pay for their services. A good adviser will also ask you whether you have discussed equity release with your family, and welcome them along to meetings. You should also have all costs explained to you in pounds and pence, not percentages, so that you can understand them. And they will welcome your questions. Remember, if you have any queries or don t understand something you are being told, just ask. AS you are making a big financial decision which will affect what inheritance you leave, you should also get good legal advice. A specialist adviser should be able to suggest someone. Again, it is better to choose a solicitor who is a specialist in equity release. The Law Society will be able to provide you with the names of specialists. And as you are looking at your inheritance plans, it makes sense to think about your will. Many people fail to write a will, even though it costs relatively little to set one up. If you haven t made one already, it is absolutely vital to do so now. It is the only way of ensuring your wishes are carried out. It will also make sure no one is overlooked or forgotten. You can nominate who benefits from the remaining value of your home once the equity release company is repaid. And you can appoint executors to manage your affairs. If you don t make a will and die intestate, it could cause problems. For those who have already made a will, it may need updating. This could particularly prove the case if your personal circumstances have changed in recent years. MAKING FINANCIAL DECISIONS As you are considering options for your financial future, you may also need to think about drawing up a Lasting Power of Attorney (LPA). This is a legal agreement which helps you if you are no longer able to, or no longer wish to, manage financial affairs for yourself. It allows you to nominate someone to act on your behalf. An LPA is particularly important if you choose a flexible drawdown mortgage, which allows you to take money in stages over the years. If you are a couple, both partners need to give consent for extra withdrawals, so an LPA can help if someone falls ill. Without an LPA, decisions about your welfare will be made by the Office of the Public Guardian, which will decide who can act for you and in what capacity. You need to be mentally capable to set up an LPA. Even if you don t think you will need it, taking one out now will give you peace of mind. 26 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 27

13 NEXT STEPS YOU should now have a clear picture of whether you are interested in an equity release plan. The next thing you should do is discuss your plans with your family. They may not have realised you wanted or needed the money, and it could be a relief to sit down and talk about it. And then think about finding an independent specialist adviser to get a second opinion it should cost you nothing to have an initial face-to-face chat. What you will also get will be a personalised example which should show how much you can raise, highlight some of the costs and let you know the whole story. Also, think about writing, or rewriting your will, and give some consideration to setting up a Lasting Power of Attorney. Again, your family will appreciate being involved. THINK ABOUT FINDING AN INDEPENDENT ADVISER FOR A SECOND OPINION Whether you decide to go ahead with an equity release plan or not, you can be confident you have taken everything into consideration. And then you can get on with the important task of making the most of your retirement. 28 UNLOCK THE CASH FROM YOUR HOME UNLOCK THE CASH FROM YOUR HOME 29 UNLOCK THE CASH FROM YOUR HOME 29

Speak to the experts You ve taken your first steps to discovering financial freedom by requesting this exclusive Daily Mail guide, sponsored by Key Retirement. Key are committed to ensuring you have the full story when it comes to unlocking the cash from your home. You can access a wealth of knowledge, experience and expertise by choosing this service. Key are: The UK s number-one independent equity release specialist Committed to offering exclusive deals that are regularly the best on the market Consistent consumer and industry award winners Committed to delivering the highest levels of customer care Dedicated to providing each customer with a personalised, professional service Key s award winning service... This is an equity release plan. To understand the features and risks, ask for a personalised illustration. Searching the entire market to find the best plan for you, including... We ve taken this opportunity to provide you with information on our other services, including Retirement Options, Wills and Lasting Powers of Attorney. Equity release For impartial information call Key Retirement FREE on 0800 531 6032 Lines are open Monday to Thursday 9am-7.30pm, Friday 9am-5:30pm and Saturday 9am-1pm www.keyretirement.co.uk/dailymail Wills and Lasting Power of Attorney Peace of mind Call free 0808 915 0405 Lines are open Monday to Thursday 9am-7.30pm, Friday 9am-5:30pm and Saturday 9am-1pm www.keyretirement.co.uk/wills-lpas Retirement Options Could you boost your retirement income? Call free 0808 252 9099 Lines are open Monday to Wednesday 9am-7.30pm, Thursday to Friday 9am-5:30pm and Saturday 9am-1pm www.keyretirement.co.uk/retirement-options

For more information call 0800 531 6032 or visit www.keyretirement.co.uk/mail UNLOCK THE CASH FROM YOUR HOME IN ASSOCIATION WITH KEY RETIREMENT BY JAMES CONEY