Estate planning plays an important role in any effective long-term financial strategy. Preserving wealth from one generation to another can be complicated and requires a holistic approach to aligning your portfolio accordingly.
We can help by laying the foundations for efficient Inheritance Tax planning and, through cash flow projection, generate a picture of the impact of gifting strategies and other alternatives. Taking into account individual time horizons and specific mandates, we will utilise a number of techniques to protect your hard-earned wealth. This could include setting up trusts, fortifying your drawdown strategy or covering liabilities with life cover.
Equity release/Lifetime mortgages
A lifetime mortgage is a long-term loan where you borrow money secured against the value of your home. It is one of the main types of equity release. It allows you to release a tax-free cash lump sum, or take a regular income from the value of your property.
You continue to live in and have ownership of your home. Typically the loan does not need to be repaid until the last borrower dies, moves into permanent residential care or if the property is sold.
Keeping ownership of your home means that you continue to benefit from any rise in the value of your property. If there is any money left over from the sales proceeds after the loan is paid off, it will go to you or the beneficiaries of your estate.
Taking out a lifetime mortgage is a big decision and it might not always be the best solution. Before recommending you proceed, our advisers will holistically review your circumstances to make sure that a lifetime mortgage is appropriate. This includes completing a cash flow forecast to project your circumstances forward throughout your retirement and place the lifetime mortgage in its proper context. We also pay particular consideration to:
- How releasing equity could affect your state benefit entitlement
- The impact releasing equity could eventually have on how much you are asked to pay towards long-term care
The lender will charge interest on the loan. Normally, the interest will be added to the loan so you do not have to make regular interest payments. ‘Rolling up’ the interest in this way makes a lifetime mortgage attractive for those who prefer a greater disposable income. On the other hand, rolling up the interest could also quickly increase the amount you owe and will reduce the amount of equity you have in your property over time. If preserving equity in your property is a priority for you then our advisers can recommend products that provide the option to repay interest regularly so the amount you owe does not increase.
The maximum loan available will depend on your age, the value of your property and your health. We will identify the lender and product that works best for your circumstances.
Fleet Street Wealth only works with lenders that have demonstrated their commitment to the highest safeguards and guarantees for consumers by joining the Equity Release Council, an industry body dedicated entirely to the protection of plan holders.
Fleet Street Wealth will only ever recommend a lifetime mortgage product that comes with a ‘no negative equity guarantee’. This means that you or your beneficiaries will never need to repay more than the sale proceeds of your property, even if the final loan is greater than this. This means that the lender, not you, carries the risk of negative equity.
Specialist products like lifetime mortgages tend to be more expensive compared to ordinary residential mortgages. Our independent whole-of-market approach means that you can be confident that our advisers are not tied to any lender and are free to recommend the most cost-effective solution available.