Equity release customer story – Difference to lives
A mother and daughter divulge how equity release made a difference to their lives
There are all sorts of reasons people aged 55 and over choose to release money from the value of their home. It’s known as equity release (because you’re releasing equity from your home). The type we offer is called a lifetime mortgage.
It’s a long-term loan you can take out against your home any time after you turn 55. There are no monthly repayments, although interest builds up for as long as you have the mortgage and is charged on the total amount borrowed and the interest already added. This quickly increases the amount you owe. The total amount you owe is usually repaid from the sale of your home when you (and your partner, if equity release is taken out jointly) pass away or need long-term care, subject to our terms and conditions. Taking a lifetime mortgage will reduce the amount of inheritance you can leave, and may affect your tax position and eligibility for certain means tested benefits.
Chris took out a lifetime mortgage with us to give her home a long overdue refresh. She and her daughter, Sally, spoke to us about how they found out about our equity release, and the impact it’s had.
The family home needed some love
“We’ve lived in our home for nearly five decades, with little work done in that time – so it needed quite a bit of TLC,” says Chris. “We needed a new driveway, roof and furniture, as well as fresh carpets throughout the house. We wanted to install a modern bathroom too. And we needed to get the bungalow rendered. Like I said, there was a lot that needed to be done but we simply didn’t have the cash available for everything.”
This is often the case for people considering lifetime mortgage. And with the home often being their biggest asset, it's value can offer access to the funds they need.
Old ground, revisited
“I’d seen the TV ads for equity release and it seemed like a good idea,” says Chris. It wasn’t the first time she and her husband had looked into it. She explains, “It’s something we’d thought about years ago but it wasn’t worth it for the amount we needed at the time.”
But given the amount of work the house needed, things were a little different this time round.
It takes a name you can trust
When the time came that Chris and her husband were ready to truly explore taking out equity release, they chose to go with a name they knew well. “Aviva was a firm favourite for us,” Chris explains. “We’ve had all sorts of insurance policies with them, so it was a company we could trust. We’d seen the TV ad and, after doing a little more digging ourselves, we liked what we saw and heard.”
Going with a trusted name was an important factor for daughter, Sally too. “I wanted to make sure my parents had done all their research, which I know my mum’s good at. And I wanted them to be certain this was the route they wanted to go down,” she explains.
“I didn’t know much about equity release to begin with. But I know Aviva is a reputable company so I knew my parents were going ahead with someone they could trust.”
There were other things that piqued Chris’ interest. She says, “One thing that really appealed to us was the amount we could borrow and the fact it wouldn’t impact on the value of our home.”
When the process got started, Chris says everything was faultless. “We came armed with plenty of questions – all of which were expertly answered by the adviser we were speaking to.”
"One thing that really appealed to us was the amount we could borrow and the fact it wouldn’t impact on the value of our home."
Thumbs up from the kids
When Sally learnt her parents were considering taking money out of the home, she thought it was a brilliant idea. Chris says, “She really supported the idea that we were using some of the money we’d worked all our lives for on something for ourselves”.
Taking out equity release with us may affect your tax position and entitlement to means-tested benefits. It will also lower the amount you can leave as an inheritance to the people you love. That’s because the loan (and the interest that's built up on it) is normally paid back using the sale of the home. With us, you do have the option to leave a percentage of the sale price to your loved ones, and this option needs to be set up when you apply - it's called an inheritance guarantee. Opting for this does lower the amount you can borrow, though, and the minimum loan amount must still be met.
It may be a tricky conversation to have, but it's better to bring these things into the open. As Sally explains, the thought of inheritance wasn’t something that had ever really crossed her mind. “I’ve never thought about inheriting my parents’ home as that would mean they’ve both passed. My view is that they’ve worked hard for their house so what they choose to do with it is entirely their decision.”
The must-dos are done – and there are some leftovers
Taking out a lifetime mortgage with us gave Chris and her husband the extra cash they needed to take care of things that had been left for another day over the years. “The money we’ve released has made a huge difference to our lives,” Chris explains. “We were able to tick off the long list of things we needed to get done – and we still have some cash left over for emergencies. So it’s a win all round.”
Just remember, a lifetime mortgage worked for Chris and her family, but it's not for everyone. You need to consider the benefits, costs and risks before deciding whether a lifetime mortgage could be right for you.
"The money we’ve released has made a huge difference to our lives, We were able to tick off the long list of things we needed to get done – and we still have some cash left over for emergencies. So it’s a win all round."
