‘Property Rich, Cash Poor’

Equity release is an area in which our expertise is sought on an ever-increasing basis. Individuals who are ‘property rich, cash poor’, can release funds from their home. The money can be spent on whatever the borrower may so wish. Most of our clients usually want to either gift monies to their family or they want enjoy holidays and travel whilst still fit and able to do so. This is not a new market, but what has changed is the quality of the products now available and the increase in competition amongst lenders, which has led to a decrease in the rates of interest being applied.

A New Breed

This type of lending previously earned itself something of a bad reputation and, as such, many lenders withdrew from the market, not wanting to be associated with it. However, the new breed of plans available are not like the old ‘Home Reversionary Plans’, whereby the borrower sold part of or all their property to the lender, for under market value. Very few of these schemes are set-up any longer. Far more popular are ‘Lifetime Mortgages’, whereby a loan is made without any part of the home being sold. The interest on the loan can be paid by the borrower, or alternatively can be ‘rolled-up’ and paid together with the outstanding loan upon the demise of the borrower. Due to the number of providers in this market, interest rates are very competitive, and this is, no doubt, a major reason for the increase in interest that we are seeing for these plans.

Our Professional Duty

Planning in this area, as with the area Estate Planning, can often result in the raising of some sensitive issues. We take our professional duty in this area very seriously. Sometimes we will suggest to our clients that other members of the family join our meetings, if they feel that ‘another pair of eyes and ears’ might help them to come to a decision. Of course, this is up to our clients and we will not disclose any personal information to family members unless we are instructed to do so.