Homeowners are drawing larger sums of money from their homes using equity release, and around one-fifth of these are planning to pay down their mortgage, new research has found. But what are the potential pitfalls? On average, equity release will give homeowners GBP77,934, up from GBP70,625 the year before, research from Key Retirement shows.
While 63% of people planned to use the money for home or garden improvements, 22% planned to pay off their mortgage. Equity release allows you to borrow against the value of your home, and make minimal or no repayments during your lifetime. When you die or go into care, the loan and any interest is repaid from the sale of the property.
But this debt can rapidly grow. Find out how equity release works, as well as the risks involved in this strategy.
What is equity release?
The money can usually be taken lump sum or drawn down in several smaller payments. There are two types of equity release: lifetime mortgages and home reversion. With a lifetime mortgage, you borrow a proportion of your home’s value and interest is charged on that amount.
This interest is generally ‘rolled up’ into the debt, meaning you don’t usually have to pay anything back until you pass away or sell your home. Home reversion allows you to sell a share of your property to a provider for less than its market value. When you pass away or move into long-term care, the provider gets their share when the property is sold.
So, for example, if you sold 35% of your property to a provider, the provider will be repaid 35% of the final sale price. With either approach, the amount of debt you owe may increase rapidly. So you should think carefully and seek professional advice before making any decisions.
Should I use equity release to pay off my mortgage?
Using equity release to pay off your mortgage can reduce your monthly payments or even bring them to zero. If you’re older, you may struggle to be approved for a remortgage deal from your bank. Equity release may provide an alternative for slashing your payments, as well as help you access a tidy lump sum or regular withdrawals.
But keep in mind that equity-release schemes are designed to be a lifelong commitment and can seriously limit your options if you ever change your mind, need to move or want to use your equity for something else. With an equity-release plan, the amount of debt you owe can rapidly increase over time, meaning the value you own in your home is quickly eroded. Most policies have a ‘no negative-equity’ clause, meaning you’ll never owe more than your home’s value.
But if you’re hoping to leave property to the next generation, equity release could eat into their inheritance.
How much will equity release cost me?
The graph below shows how much you’ll owe over 25 years after releasing GBP75,000 in equity through a lifetime mortgage and home reversion. Based on a GBP250,000 property, you can see how your equity release debt could grow over time, dramatically reducing the the equity you have left. In this example, releasing GBP75,000 means that you could relinquish up to 70% of your property’s value.
This may not be suitable if you’re hoping to pass on your property, or the full value of your property, to your relatives.
Equity release can work in some financial situations but it’s always worth considering alternatives first before committing a portion of your home’s value. For this reason, it’s important to always seek professional advice before choosing equity release.
Alternatives to equity release
There are a few alternatives to equity release that might be more suitable depending of your financial circumstances.
Unsecured personal loan
An unsecured personal loan could be a cheaper option if the amount you want to borrow is small and you can keep up with repayments. But you shouldn’t use an unsecured personal loan to pay off your mortgage, as the interest you’ll face is likely to be much higher than your mortgage interest rate.
Keep in mind, though, that some lenders may have an upper age restriction of 65 years.
If you speak to your lender, or a mortgage broker, you may be able to secure a new mortgage deal over your property, which can bring down your monthly payments. As an example, you may be able to move to a deal with a lower loan-to-value ratio, or one where interest-rates are lower. This may not be possible in all cases, however, as lenders may be reluctant to offer a new mortgage deal to applicants who are older or retired.
If you need to release a significant amount of cash, selling your home and moving somewhere smaller could put more money in your pocket.
Speaking to a mortgage broker can help you figure out the best mortgage product if you’re looking to remortgage or move house.
San Diego Comic-Con wraps up today, and it’s been a busy week for pop culture news. While big names like Marvel and HBO skipped the show this year, the show nevertheless showcased a number of big trailers from the films and shows slated to premiere over the next year or so.
Warner Bros. stole the show this year with its massive, two-hour Saturday morning panel, during which the studio revealed its slate of upcoming films: Aquaman, Fantastic Beasts: The Crimes of Grindelwald, Godzilla: King of the Monsters, and Shazam. The clips and trailers served as the weekend’s highest-profile reveals, but also proved Warner is about to be more exciting than it has been in years.
Of course, there were plenty more studios in town to hawk some serious forthcoming wares: the SYFY channel, Netflix, BBC America, and more all released looks at projects we can’t wait to see. (The truly impressive array of covers used to pump up these trailers — Nirvana’s “Come as You Are,” David Bowie’s “Rebel, Rebel,” Lenny Kravitz’s “Fly Away,” and even a chill-inducing cut of Debussy’s “Clair de Lune” — does wonders for augmenting that excitement.) We’ve rounded up all the biggest and best trailers from this year’s show in one place for your viewing convenience. Check them out below:
Easily the most highly anticipated reveal of this year’s Comic-Con was DC’s Aquaman.
It’s no secret that the DC cinematic universe has had a rocky start, with critics and fans largely panning films like Suicide Squad and Batman v. Superman: Dawn of Justice. But especially in the wake of the overwhelming success of Wonder Woman last year, the studio has been shifting away from its overarching Expanded Universe strategy to focus on standalone stories, and Jason Momoa’s Aquaman will be the next star out of the gate.
And the film does look awesome — the action and story look solid, and it looks like it’ll have something many of DC’s past films have lacked: a sense of humor.
There are a lot of comic book properties out there, and the SYFY channel has dabbled in the field with shows like Krypton. Earlier this year, it picked up Deadly Class, the series produced by the Russo Brothers and based on the early ’90s comics about a lost kid recruited into a boarding school where the crime families of the world send their children. The result looks very SYFY-ish, but it’s intriguing nevertheless — on top of Benedict Wong steering the ship in the role of the headmaster Master Lin, it looks like Black Flag’s Henry Rollins will be joining the faculty, too.
Netflix has a new show coming from Futurama and Simpsons creator Matt Groening, Disenchantment, about a hard-drinking princess (voiced by Abbi Jacobson) and her two companions, an elf (Nat Faxon) and a demon (Eric Andre).
This trailer looks downright delightful, mixing the sensibilities of Futurama with epic, distinctly more earnest fairy-tale fantasy.
Doctor Who season 11
Doctor Who will be back later this year with a new Doctor, played by a woman for the first time. This first trailer for the next season, while a bit on the short side, sees Jodie Whittaker’s character recruiting a couple of new companions and teases the new worlds and adventures that they’ll be embarking on.
Fantastic Beasts: The Crimes of Grindelwald
We’ll get to return to the world of Harry Potter later this year in the next installment of the prequel franchise, Fantastic Beasts: The Crimes of Grindelwald. This film looks definitively darker than the first, Fantastic Beasts and Where to Find Them, as it traces the rise of the dark wizard Grindelwald (Johnny Depp) with a young Albus Dumbledore (Jude Law) and Newt Scamander (Eddie Redmayne) working to stop him.
M. Night Shyamalan surprised everyone with his 2016 film Split by revealing that it was set in the same world as his comic book-inspired 2000 film Unbreakable. The trailer for his next film, Glass, takes that connection from a fleeting, easter-eggy moment and makes it official, bringing the three main characters from both films — James McAvoy’s DID-afflicted Kevin Wendell Crumb, Bruce Willis’s super-strong vigilante security guard David Dunn, and Samuel L.
Jackson’s Elijah Price, AKA the brilliant, physically fragile eponymous villain Mr. Glass — together in a high-security facility under the care of Sarah Paulson’s Dr. Ellie Staple, a psychiatrist who specializes in delusional patients who believe they have superpowers.
Godzilla: King of the Monsters
Gareth Edwards’ 2014 film Godzilla largely underwhelmed audiences, but a first look at its sequel, Godzilla: King of the Monsters, looks intriguing, to say the least.
Coupled with that haunting aforementioned “Clair de Lune” synch, it teases humanity’s efforts to come to survive a world where giant monsters have arrived to curb their destructive effects on the planet — which will involve avoiding some epic battles between Godzilla and other kaiju like Mothra.
Star Trek: Discovery Season 2
CBS’s big Hall H panel on Friday was reserved for Star Trek: Discovery, the second season of which will premiere sometime in early 2019. In addition to an announcement-packed panel with newly installed showrunner Alex Kurtzman and the main cast, the first trailer for the new season previewed a few anticipated new developments, including the installment of Captain Christopher Pike as acting captain (poor Saru!), the appearance of Tig Notaro as a refreshing infusion of sarcastic comedy, and the coming of Spock. Also: alien sneezes.
Man in the High Castle Season 3
Amazon’s The Man in the High Castle is coming back for its third season in October, and was recently renewed for a fourth season.
We got a first look at the upcoming arc, which looks like it’ll feature new discontent in the alternate, conquered United States as the knowledge of the (rather 12 Monkeys-esque) multiverse spreads.
Syfy’s next big space show will be an adaptation of George R.R. Martin’s space-horror novella, Nightflyers, which he describes as “Psycho in space.” This first full trailer for the show certainly brings the horror as a crew embarks on a spaceship to save humanity from a dying Earth.
Seth MacFarlane’s The Orville was a surprise delight when it premiered last year. It could have been a cheap mockery of Star Trek, but it turned out to be a delightful, earnest love-letter to the classic franchise.
The trailer for its second season teases new adventures to new planets, and plenty more irreverent humor.
A big surprise out of the Warner Bros. panel was the charming teaser for its upcoming DC film Shazam! The film looks as though it has just what we’ve mentioned the DC franchise has been desperately needing: humor. (The first time we hear the name of the titular hero, the teenaged Billy Batson reacts the way any of us would: snort-laugh and say, “Wait, really?”) The film, which stars Zachary Levi and It wunderkind Jack Dylan Grazer, looks like Tom Hanks’ Big meets superheroes — a far cry from the miserably grim Man of Steel.
Star Wars: The Clone Wars
Another of Comic-Con’s biggest surprises this year was the unexpected reveal that Disney was bringing its animated show The Clone Wars for another 12-episode season. The new episodes will help bring the story, which was left hanging when the series was canceled in 2013, to a close when it premieres on Disney’s forthcoming streaming service.
The Walking Dead season 9
The Walking Dead will return for its ninth season in October, and at its big Comic-Con panel, AMC released our first, extended look at what to expect. The season — which will be star Andrew Lincoln’s last — looks at the survivor’s continued efforts to survive in the aftermath of the Saviors war.
Young Justice: Outsiders
DC gave us our first look at its DC Universe streaming service over the weekend, including its aforementioned live-action show Titans, but it also showed off an extended trailer for the third season of the animated Young Justice: Outsiders, which teases the superhero team fending off a new threat to Earth.
DC’s upcoming streaming service DC Universe will debut later this fall, and when it does, it’ll include an original, live-action show based on Teen Titans.
Like the CW did with Arrow, Titans — which features an extremely goth Teagan Croft as Raven, not to mention the Senegalese Anna Diop (Bosch, 24: Legacy) and Japanese Ryan Potter (Big Hero 6) shaking up the white-coded team as Starfire and Beast Boy, respectively — looks like it’ll be a far grittier (and far more mature, with a TV-MA rating) take on the once-goofy squad, with quite a bit of profanity — “Fuck Batman” — and bone-crunching.
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