Equity release

The following case study is a fictional example designed to represent a typical situation and does not relate to any particular individuals. You should not look upon this as financial advice or a recommendation of a particular course of action. Rather, consider your own circumstances carefully and consult the Saga Equity Release Advice Service for a professional, fully advised service.

The solution to releasing equity from the value of your home may involve a lifetime mortgage, or a home reversion plan. To understand the features and risks, ask for a personalised illustration.

Think carefully before securing other debts against your home.

Case Study 1 - Giving the family a helping hand

At 83, Mrs Brown hated to see her grandson moving from rented flat to rented flat and wanted him settled in his own home. However, he just could not afford a deposit to take the first step onto the property ladder.

Despite owning her own bungalow, Mrs Brown had little savings and no excess income. However, a friend told her about equity release and how it would enable her to take cash from her property without needing to make any repayments during her lifetime.

A meeting was arranged between Mrs Brown, her grandson and a specialist adviser to discuss her circumstances. After a review of the possible options, a roll–up lifetime mortgage was recommended. Based on her age and the value of her bungalow (approximately £220,000), Mrs Brown borrowed £60,000. She used £10,000 to replace her aging car and gave the remainder to her grandson for his deposit. If she needs more money in the future, Mrs Brown could also draw down another £35,700.

In this fictional example, Mrs Brown has used equity release to help her grandson when he needed it most, and she can still remain in her home for the rest of her life. It will reduce the future value of her estate, but it has allowed her to see the benefits of her generosity in her lifetime.

Notes: Current house prices based on average bungalow price in South West England Q2 2011, taken from Halifax House Price Index. Released amount based on maximum available from Just Retirement Lump Sum Lifetime Mortgage, August 2011.