Using equity release to unlock capital
PUBLISHED: 15:34 21 February 2017 | UPDATED: 15:38 21 February 2017
With the significant increase in UK house prices over the past few years, equity release has become an increasingly popular financial planning tool, used by homeowners to free up capital locked in to the value of a property.
At John Lamb we have a specialist equity release team that works closely, on a one-to-one basis, with clients considering equity release as an option. We guide them through the wide range of lenders and varying interest rates to find the arrangement that best suits their particular circumstances.
Our clients are using equity release to make up shortfalls in their own income, pay off existing mortgages, fund home improvements or meet the costs of care. Others use the money to help with family spending – such as school fees for grandchildren or the deposit for a first flat.
Obviously making the decision to undertake equity release is one that cannot and should not be taken lightly, which is why it is important to talk to specialists that know the market and are able to independently evaluate all the different options available. However, managed properly equity release can be a really effective way to pass on wealth that is tied up in residential property, reducing IHT liabilities if the client survives seven years, and providing capital for the next generation at a time when they need it. The debt and rolled-up interest are both normally deductible for IHT purposes.
Equity release in practice
At John Lamb we have recently dealt with the following two cases: Firstly, releasing £3 million from a property worth £12 million on a fixed interest rate of 3.8%. The client gifted the full amount to children and grandchildren, and purchased a gift intervivos insurance policy to cover the IHT liability over the next seven years. Secondly, we released £300k from a house worth £2.2 million on a fixed rate of 3.6% for clients who required the money to cover their day-to-day costs. The arrangement included a reserve facility for a further £300,000, which the clients can draw down at any time, although the interest rate is not fixed for these reserve funds.
At John Lamb we specialise in properties with a value of between £300,000 and £15 million. As highly qualified independent financial advisers, we have the freedom to explore the entire market, have excellent knowledge of all the financial products available and work with lenders to find the most appropriate solutions for our client.
For a free, no obligation initial discussion on your requirements, please do not hesitate to call us on 0207 633 2222 or email firstname.lastname@example.org. Or for more information on equity release and to download your free John Lamb Equity Release Guide go to www.johnlamb.co.uk/expertise/equity-release.
Equity release plans allow you to unlock cash from your home. A lifetime mortgage is secured against your home. Unless you decide to go ahead, our service is completely free of charge.
Article by Donna Buffham, equity release specialist at multi-award winning John Lamb Financial Planning, an independent firm of Chartered Financial
Planners based in London and established in 1959. John Lamb is the current holder of the Financial Team Advisor of the Year accolade as awarded by the highly respected Society of Trust and Estate Practitioners (STEP).