We are always looking at ways to make our products and services, and the information about them, more accessible, so we welcome your questions. Here are the ones Saga Equity Release, provided by HUB Financial Solutions Limited, gets asked most often.
If you take out a lifetime mortgage, which is a loan secured against your home, the property remains in your name as it would with a conventional mortgage. A lifetime mortgage is a loan secured against your home. If you take out a home reversion plan, the reversion company will own the proportion of the property you sell to them and, even if this is 100%, you can still live in your home rent free for the rest of your life.
This depends on the value of your home and the amount remaining on your existing mortgage. Any outstanding mortgage secured against your home will have to be paid off at the same time as taking out equity release. This can be done using the money you release. Just be aware that using equity release to repay existing debts or mortgages may cost more in the long-term.
Many products can be transferred to a new home as long as the property is acceptable to your equity release provider as continuing security. With a lifetime mortgage, a loan secured against the home, if your new property is worth less than your old home, you may have to repay some of the outstanding loan.
You could use equity release to help out your family while you are still living, but it will reduce the value of your estate and therefore the amount that will go to your beneficiaries on your death. There may be inheritance tax implications for gifting money.
With a lifetime mortgage, which is a loan secured against the home, if your home sells for more than you owe, the excess would form part of your estate. With some lifetime mortgages, you could reduce the amount you owe by making interest payments.
With a home reversion plan, you’ll know exactly what proportion of your home’s value will be left to your loved ones, but not the amount this will be worth.
Equity release will not affect any other money you leave as part of your inheritance, such as savings or life assurance policies. Gifting money may be subject to inheritance tax.
There are a number of possible costs involved in taking out equity release:
• Set-up fees
• Legal fees
• Valuation fees (not applicable with Saga Equity Release)
• Advice fee on completion.
With a lifetime mortgage, a loan secured against the home, you can add some of these fees to your loan to avoid too many upfront costs.
With a lifetime mortgage, a loan secured against the home, the amount that will need repaying when you die or move permanently into long-term care depends on the amount of equity you release, how long you’ve had the loan, the rate of interest charged and any fees added.
Interest on a lifetime mortgage is rolled up or compounded, which means the interest for the second year is calculated on the sum of the original loan plus the interest that was charged during the first year. This same process applies year after year, so that each year the interest is calculated on a higher amount than the previous year.
A home reversion plan isn’t a loan and so it won’t accumulate interest. Instead, the provider will receive the agreed proportion of the property value when it’s sold following your death or permanent move into long-term care. No one will know the monetary value of that proportion until the property is sold.
A lifetime mortgage, a loan secured against the home, becomes repayable when the last person named on the equity release agreement dies or moves permanently into long-term care. The amount owed is usually paid to the equity release provider from the sale proceeds of the property, although it can come from other financial means.
Until the loan is repaid, interest will continue to accrue. Most lenders allow up to 12 months for the money to be repaid – this can vary between providers and will be detailed in the documentation if you take out a product.
With a home reversion plan, the property will also need to be sold so that the equity release provider can take their share of the sale proceeds. If the provider owns the whole property, they will be responsible for selling it and recouping their costs.
The amount of equity you can release depends on your age and the value of your property.
You can use our calculator to get a quick indication.
Releasing equity is much like buying a house, so it's not an instant process. Your adviser needs to talk to you and assess your finances so you can make an informed decision. But we know that once you’ve decided, you want things to proceed quickly.
The product available through Saga Equity Release, the Saga Lifetime Mortgage, which is a loan secured against the home, comes with a Saga Service Promise. This means that we’ll aim to have your money released to your solicitor's account within 40 working days of your application being received and accepted by Just - the provider of the product. T&Cs apply.
For a step-by-step guide to the equity release process, see Is equity release right for me?.
Use Saga's FREE lifetime mortgage calculator to get an instant estimate of just how much cash you could release from your property.
The team at Saga Equity Release can help you decide whether equity release is right for you. Arrange a call back at a time that suits you.
To inform Saga of a bereavement please call Saga on 0800 092 3816. If your loved one has taken out equity release please also contact the provider using the details on the documents you have.
If you need extra help or support not mentioned here please visit our support page which will show you all the ways we can help.
There's plenty to explore and learn about equity release.
Our lifetime mortgage, the Saga Lifetime Mortgage, is provided by Just and is exclusively available through Saga Equity Release.
Is equity release the best way to free up tax-free cash in your home?
What are your different options for equity release?
Considering equity release should involve as much wider reading as possible, here are some articles we hope you find useful.
For more information call the Saga Equity Release team today to help you find out whether equity release could help you. Saga Equity Release is provided by HUB Financial Solutions Limited.
Saga Equity Release is provided by HUB Financial Solutions Limited.