Professional Mortgage Services

Telephone: 0370 900 94 94 / 0161 237 7540

Email: [email protected]

Later Life Lending

Later Life Lending Options:

  • Traditional mortgages
  • Retirement Interest Only (RIO) mortgages
  • Equity release lifetime mortgages

We offer bespoke advice on later life lending solutions, which includes equity release, from our team of fully qualified advisers.

Equity release lifetime mortgages are available to those aged 55+ and involve borrowing against the value of a property.  The capital released is tax-free and the term is open ended meaning the loan is only typically repaid upon death or moving into permanent long-term care.  Repayment of the loan is usually from the sale proceeds of the property.

Borrowers can choose to pay nothing back until the property is sold, they can choose to make fixed monthly interest payments, or they can choose to make voluntary repayments.  If the preference is to make repayments there are no affordability criteria, which is a major benefit to equity release plans.

Equity release can only be recommended by advisers qualified in this field and clients will also need to seek independent legal advice from a lawyer. In addition, we always recommend that any beneficiaries be informed/involved where possible.

Equity Release – Features

  • Tax-free cash
  • Ability to draw down funds in stages (ad hoc)
  • No requirement to make repayments
  • Option to make either ad hoc or regular repayments, if preferred
  • Under certain circumstances penalty charges can be waived

Two structures to choose from

  • Lump sum
    • Single tax-free sum
    • Interest charged on full loan amount from ‘day one’
    • Further advances can be requested but not guaranteed

  • Drawdown

    • Total loan facility agreed at outset
    • Only an initial tranche is drawn at inception
    • No interest charged on the undrawn funds
    • Ability to withdraw funds on ad hoc basis when needed
    • Prevailing rates at the time applied to future withdrawals
    • No obligation to draw down
    • No fees to access the reserve facility
    • Quick access. Typically, within 7 – 14 days

Equity Release can help clients with:

  • Supplementing income in retirement
  • IHT strategy/planning
  • An alternative to drawing from a pension fund or investments
  • Gifting to children/beneficiaries
  • Extending mortgages into retirement
  • Aspirational objectives such as home improvements or holidays
  • Fund a new property purchase
  • Long term care costs

Inheritance Tax

For clients with significant property wealth wanting to reduce the potential Inheritance Tax (IHT) liability for beneficiaries, equity release lifetime mortgages are becoming an increasingly popular choice as part of an IHT planning strategy.  Careful estate planning can help achieve significant reductions in IHT liabilities.

The Residence Nil Rate Band (RNRB) can be used by property owners to reduce their Inheritance Tax liability, currently by up to £175,000.  However, if the value of the estate exceeds £2 million, the RNRB will taper off giving some high-value estates no RNRB benefit at all.  Raising a debt against a property could reduce the value of an estate back below £2 million and therefore maximise the RNRB allowance.

Equity release provides an opportunity to turn the illiquidity of property wealth into liquid funds which can then be used in conjunction with other forms of IHT planning.  Gifting the proceeds of a lifetime mortgage will move the value of the gift out of an estate tax-free subject to the seven-year tapering rule.  It also allows for other options to be considered including passing on the annual allowance, regular small gifts, and paying for a child or grandchild’s wedding, all of which will lower the estate value and IHT liability.

Property Values

The future value of a property will determine the amount of equity remaining when a property is eventually sold. According to the Office of National Statistics (ONS), the average house price in the UK has increased from £150,488 in 2005 to £289,818 in 2023.  This equates to an increase of 92% or an average of 4.46% per annum over those 18 years. However, it is important to note that property prices can go down as well up.

Equity Release Council

The Equity release Council are the industry body for the UK Equity release sector. The Council enforces safeguards to promote high standards of conduct and practice in the provision of, and advice on, equity release.

All members of the Council are required to:

  • Provide a fair, simple and complete presentation and explanation of your equity release plan
  • Clearly set out the benefits and limitations of the plan, together with your obligations under the terms of the contract
  • Provide information about the costs
  • Give guidance on what will happen if you wish to move to another property
  • Explain how changes in house value may affect your plan

All Equity Release Council approved plans that we recommend will guarantee borrowers:

  • The right to live in the property for their lifetime
  • The right to move to another property
  • A ‘no negative equity’ guarantee
  • 100% ownership of their property
  • Right to make repayments

What we offer:

  • Independent advice across the whole suite of later life lending products
  • Consideration of traditional lending products
  • Confirmation of why an Equity release plan is suitable
  • Access to bespoke products
  • Research which is free of charge and without obligation
  • A no-obligation report to confirm our recommendation, tailored to the client’s circumstances and requirements
  • Time to decide and reflect without pressure to make a quick decision

Initial advice and report are provided at no cost and without obligation. If you choose to proceed and your plan completes, a typical advice and administration fee of up to £1,500 is payable

Who we work with:

We have a growing list of professional introducers, including several of the largest Accountants, IFAs and Wealth Managers in the UK.  Having worked with these companies for many years, they trust us to provide the most suitable advice to their clients.

Best Buys:

Below is an up-to-date assessment of some of the ‘best buys’ that are currently available in the market based on a married couple, both aged 80 and in good health (note that lower rates and/or larger loans may be available for those clients with a reduced life expectancy).

Last updated Friday 10th January 2025

Loan to Value Rate (Fixed for Life) Overall Cost For Comparison (APRC) Early Repayment Charges Product Fee
15% 5.94% 6.10% Apply for 8 years – 7% year 1, 6% year 2, 5% year 3, 4% year 4 and 3% years 5-8 £Nil
30% 5.99% 6.16% Apply for 15 years – 10% year 1, 9% year 2, 8% year 3, 7% year 4, 6% year 5, 5% year 6, 4% year 7, 3% year 8, 2% year 9 and 1% years 10 – 15 £Nil
40% 6.29% 6.47% Apply for 15 years – 10% year 1, 9% year 2, 8% year 3, 7% year 4, 6% year 5, 5% year 6, 4% year 7, 3% year 8, 2% year 9 and 1% years 10 – 15 £Nil
45% 6.59% 6.79% Apply for 15 years – 10% year 1, 9% year 2, 8% year 3, 7% year 4, 6% year 5, 5% year 6, 4% year 7, 3% year 8, 2% year 9 and 1% years 10 – 15

 

 £Nil

*15 year gilt yield (close on 09/01/25) – 5.12%

These figures are correct at the time of going to the Internet.

© Copyright Professional Mortgage Services. The information contained herein may be based on data obtained from recognised statistical sources, issuer reports or communications, or other sources believed to be reliable. However, such information has not been verified and we do not make any representations as to its accuracy or completeness. Any statements non-factual in nature constitute only current opinions which are subject to change, without notice. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.