THE RESPONSIBLE EQUITY RELEASE GUIDE. Everything you need to know about equity release.

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1 THE RESPONSIBLE EQUITY RELEASE GUIDE Everything you need to know about. An informative guide from the specialists

2 Welcome to the Responsible guide to. Equity release has come a long way since regulation in 2007, as the UK s 55 + population looks to safely take advantage of their biggest asset to fund their ambitions. We set up Responsible to work with the growing number of people who want to use as a sensible, way to improve their lifestyle. What is? 2 Lifelong aspirations, debt-clearance, income top-ups or family matters may be the reason you have enquired about. Now it is time to see if is the right way to achieve your aims. This guide is designed to simplify and debunk the myths, without taking away any of the detail and information that will help you make your decision. We ll also bring our new moneysaving features to life using examples based on industry facts. Types of How can help me? Equity release examples Our assurances & safeguards Why should I choose Responsible? If you would like to release equity, we would like to be the ones to help you along your way. Throughout this guide, we hope you ll see why so many people look to use their property and why you might want to work with an organisation like Responsible. Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks ask for a personalised illustration. Responsible Life Limited trading as Responsible Equity Release is authorised and regulated by the Financial Conduct Authority. The FCA registration number is or visit 1

3 What is? Equity release lenders now give homeowners aged 55+ the option to turn the equity built up in their property into tax-free cash without selling or downsizing. You continue to own the property 100%, keep the deeds in your name and have the right to remain in your property for life. Equity in your home is the difference between the home s fair market value and the outstanding balance of all mortgages, secured loans and charges on the property. Usually, to access your equity you would need to sell your property or remortgage with difficult monthly repayment commitments. However, is a product designed to meet the needs of asset-rich homeowners who don t want to move. It s popular because it makes sense. The lenders like to invest in reliable, longterm UK property whilst those releasing equity benefit from gaining access to money that would have otherwise been tied up for life. The money you receive is yours to spend as you please and as the equity is already yours, it is completely tax-free. You can also choose how you would like to receive the money - whether it be a cash lump sum, an account to draw upon as and when required, or a mixture of the two. We are members of the Equity Release Council Conduct Authority regulations. Responsible Equity Release are official members of the Equity Release Council and uphold all of its standards and regulations. The Equity Release Council, formerly known as SHIP, is an organisation dedicated to the protection of the consumer through a code of conduct which goes over and above Financial We only ever recommend plans that adhere to strict Equity Release Council standards. Only those who hold the required qualifications are allowed to advise and arrange an Equity Release Council plan. How equity can build up in a property Peter buys a house for 200,000. Peter personally pays 100,000 and borrows 100,000 in the form of a mortgage. The value of the home has increased to 300,000 over the years and Peter has paid off all but 20,000. Peter has 280,000 equity. Peter can access a percentage of this through. or visit 2

4 It s nice to see their inheritance in action. Because of, my granddaughters don t want for anything when it comes to education. 3

5 Types of There are three main types of that Responsible recommend. We do not advise on home reversion plans. We only advise on lifetime mortgages where you retain 100% ownership and the deeds to your property. 1) Roll-Up Lifetime Mortgage 2) Drawdown Lifetime Mortgage 3) Interest-Only Lifetime Mortgage You receive a cash lump sum and maintain 100% home ownership. Interest will accrue on the amount of cash you choose to release. Your estate will usually settle the amount owed from the sale of the property. Most lenders allow up to 12 months for the estate to sell the property without interference. If your family would like to keep the property instead, they are welcome to pay the balance from other means. Works the same as a Roll Up Lifetime Mortgage except you can choose to release the money flexibly, as and when you need it. Interest will not accrue on the money held in reserve until you have released it. As with the Roll-up and Drawdown Lifetime Mortgages, you receive a cash lump sum and maintain 100% home ownership. In fact, you can choose to pay anything from 25 per month up to the full amount of interest due. Any interest you do not pay will accrue as with the Roll-up Lifetime Mortgage. If you decide you don t want to make monthly payments any more, you can stop and the plan will change to a regular Roll-Up Lifetime Mortgage. This is a lifetime mortgage. To understand the features and risk, ask for a personalised illustration. or visit 4

6 I wanted to pay my debts and then create a little area of my garden that looked pretty and could be enjoyed in all seasons. I did just that, thanks a million. 5

7 How can help you? 1. You may want to use the money to take that holiday you ve always dreamed of, perhaps visiting family that you haven t seen for years. 2. You may want to buy a new, more reliable car to help you get around. 3. You may want to use the money you release to make up the shortfall that retirement sometimes creates. 4. You may want to consider releasing equity to help make home improvements, such as putting up a conservatory, landscaping the garden, installing a more modern kitchen or extending the home to accommodate more frequent family visits. 5. Equity release can be used to pay off your mortgage or credit card bills, meaning you can reduce your monthly outgoings and free up cash for more rewarding expenditure. 6. Like more and more people you may want to release equity to help support your family, children or grandchildren as and when they need the help instead of the more traditional route of waiting to leave an inheritance. The advantage of this is that you can see and enjoy the help you have provided. 7. You may want to use as a tool in a more comprehensive inheritance tax strategy. At Responsible, we can put you in touch with qualified advisers who can help plan to reduce inheritance tax. Points To Consider Releasing equity from your home could affect your entitlement to means-tested state benefits. An adviser will be able to explain exactly what this means to you personally and can then provide advice accordingly. A Drawdown Lifetime Mortgage can often be used to ensure you don t jeopardise your benefits. If you invest the money you release then your tax position could be affected and the investment return may be less than the interest charged on the d. Releasing equity will reduce the value of your estate over time. All plans recommended by Responsible do come with a No Negative Equity Guarantee ensuring you will never owe more than the value of your home. Some plans allow you to guarantee an inheritance to protect your estate see page 8 for a Protected Equity Guarantee example. It s important to remember that does not usually come with monthly payments, meaning you can t face repossession for missing payments. Even with the interest-only plan, if you do miss payments, or it is no longer affordable, it will convert to a Roll-up Lifetime Mortgage leaving you with no monthly repayments. or visit 6

8 ³, IHOW VXFK D JUHDW UHOLHI ZKHQ, QDOO\ FOHDUHG P\ PRUWJDJH DQG FUHGLW cards. Debt payments are no more and I no longer fear the post. 7

9 Equity release examples Roll Up Lifetime Mortgage Example: Sally was 55, her husband John was 62 and their house was worth 200,000. They borrowed 25,000 to pay off bills and buy a car. The interest rate was fixed for life and the interest added to the loan each year. Their house has increased in value at a yearly rate of 2.85% (only half the average yearly house price growth for the years ). They made no monthly repayments during their lifetime and so the interest has rolled up. Drawdown Lifetime Mortgage Example: Michael was 71, his wife Mary was 69 and their house was worth 400,000. They were able to reserve 20,000 in a drawdown facility to call upon in the future if needed. After 5 years, they drew 5000 from their drawdown reserve and when Michael died 10 years after taking the plan out, Mary drew 15,000. Their house has increased in value at a yearly rate of 2.85% (only half the average yearly house price growth for the years ) and was worth 609,711 when Mary died. Their estate sold the property and repaid the equity release provider the money borrowed plus interest. The money remaining went to the estate as per the demands of Mary and Michael s will. Flexible Repayment Example: James was a 62 year old widower. James released 30,000 from his property and chose the flexible equity plan where he was able to repay up to 10% of the plan every year. James then reduced these payments to 500 a year for the next five years as he was only working parttime. - - James was able to release 30,000 when he needed it, remain in his property for as long as he wanted to and keep the size of the plan down by making regular repayments. * Please note that this is only an example using half the previous years actual growth as a comparison and the value of your house could go down or not increase at the same rate as it previously had. Responsible only recommend plans that guarantee you will never owe more than the value of your home. The source for the historic growth figures is the Nationwide House Price Index at 5.7%. or visit 8

10 Our Orassurances ssrn s&sfg &safeguards rs Responsible assure you that no matter what, you can expect the following from us: RESPONSIBLE Advice Assurance sura You will have the safety net of advice signed off by two advisers. Your personal financial circumstances will be taken into account and plans will be recommended accordingly. We will give you access to our exclusive deals from providers as and when they arise. We offer plans from the whole of the marketplace. We work for you and you only. You will have the choice of face-to-face or telephone advice. We only charge fees for our advice if you go through with our recommendations. Your enquiry will be dealt with promptly and courteously. We will offer you plans that guarantee an inheritance. Your initial contact will ensure that all your questions are answered and that all advice provided will be by appropriately qualified specialists. Plans will be laid out clearly with respect shown to all alternatives. Whether you choose face-to-face or telephone advice, we provide free consultations to discuss your needs, priorities and preferences. Only if you choose to go ahead with a plan do we charge a fee. or visit 9

11 Why Wychoose Rsp Responsible? s Now that you ve read our informative guide, would you like a more personalised service? If the answer is yes, we d like to discuss with you the features and savings of the different plans that we have extensively sourced and negotiated on your behalf from the whole of the marketplace. You ll be in the comfort of your home, explaining to a relaxed, mature, qualified adviser what you would like to achieve. Unlike our competitors, we will bring personalised quotes on the first visit so your priorities, goals and ambitions can be matched with sound, detailed advice on how you can achieve them. For your peace of mind in what is an important decision, we go further than our competitors. All advice we provide benefits from a second opinion from another one of our expert advisers. They will be sent the facts to look through, discuss the proposed solution and sign off the advice. That way, you get twice the experience at the same cost and without any time or cost requirements to see more than one person. Our knowledgeable, qualified specialists offer expert advice you can trust, they answer your most probing questions about future downsizing or care plans, the impact on inheritance, taxation and state benefits. You ll then be free to make the right decision based on high quality advice and lots of clear information. If you decide to proceed, you can arrange another free visit to help you with the paperwork. We only ever charge for all of this should you complete a plan and we don t expect payment until you receive your money. If you decide it s not right for you, we won t charge you a thing for our time. It s an industry we re proud of and we want you to know all about it. Yours faithfully, The next steps... Call us on our freephone line for a free, initial telephone consultation. After the telephone consultation, we will arrange a free, face-to-face consultation with one of our financial advisers local to you. On the day, our adviser will explain the different types of equity release plans that are available. They will talk through the positives and negatives of releasing equity and apply them to your personal circumstances. We welcome family involvement on the day of the appointment and our financial advisers are able to answer any questions they have. We will then be able to make a recommendation if is right for you and if so, which plan is most suitable. If you choose to take up our recommendation, we have access to preferential deals from the providers and will arrange the plan from start to finish for you, ensuring it completes smoothly. If at any time before your plan completes you wish to cancel, you are free to do so and will not incur any fee from us. Steve Wilkie Managing Director or visit 10

12 A final thought from some of our customers Responsible Equity Release have changed my life dramatically. As enough. I considered moving to a cheaper home but loved the home I was in. Responsible gave me the chance to stay in my home, own it 100% and still have enough money to do the things in retirement that I have worked hard to do. The way they relayed information As I sat in my garden yesterday, I am ever so glad I went through up my living room and had a helping hand come in to turn my garden into a manageable state of affairs! All I wanted was to be be paid. I can do all those things now...and more. My Peruvian lilies have just started to bloom and life is good! Mrs. Briggs Mr. Stratford Why not see how Responsible can help make your retirement more comfortable? Arrange a home visit : Visit our website : Ask a question : [email protected] Write to us : Responsible Equity Release Responsible Life Unit 11, 4 Mills Bakery Royal William Yard Plymouth Devon PL1 3GE