All posts tagged Inheritance Tax

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28
Feb

How Equity Release Schemes Help Over 55s

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Are you ready for all the good things that equity release has in store for you? It’s no surprise that many people over the age of 55 are focusing on the advantages of equity release. By definition, equity release is simply converting all or some of the equity in your home into cold, hard cash. Plenty of companies offer you an option for gaining cash like Stonehaven.

Stonehaven is a company that offers equity release possibilities for people who are over the age of 55. Only over 55’s can tap into what equity release schemes have to offer. So consider yourself lucky if you fall into this age bracket today. Stonehaven is pioneering because for the last 6 years it has been offering people over the age of 55 the chance to release equity with their award winning equity release company with a wide range of different schemes.

Sample a little bit of what these plans have to offer you by looking below:

Interest only lifetime mortgage: Stonehaven offers interest only lifetime mortgages. These are mortgages that allow you to get a cash lump sum where you are only paying the interest back and not racking up any extra debt on your account. Hence, it is unlike a roll-up lifetime mortgage (see below). Consider an interest only lifetime mortgage if you want the amount you are paying every month to stay the same instead of going up and down depending on what is going on in current affairs.

Fixed Interest Rate for life: Stonehaven’s plans offer a rate which is fixed for the rest of your life, leaving you safe in the knowledge of exactly knowing your monthly repayments. This allows one to budget accordingly & plan how to spend the household surplus.

Roll-up equity release: This is the plan that has the quirky name. A roll-up equity release plan is essentially a way for the interest you have on your mortgage to be rolled up in your equity release and you pay it within the loan. The money that you get from the roll-up equity release is basically tax-free so you can use it any way that you want. What happens with roll-up equity release is it stays as a debt so when you die, your family will not be burdened with a massive cut from HM Revenue when it comes to inheritance tax.

As mentioned, Stonehaven is not the only company offering lifetime equity release mortgages. You may find that another option is more affordable or better suited to your needs. Before deciding on one company always do your research. This is one of the top tips we can offer along with a few others.

Products with Advantages and Disadvantages
Whether you decide to choose an equity release from Stonehaven or another company there are going to be advantages and disadvantages of equity release schemes. You will want to decide if you are able to live with these or if you feel it is just too much for a little money.

Living without money especially enough to cover your bills in retirement is often too hard. You worked your whole life for a chance to relax. Taking advantage of products on the market that can offer you help is a good thing as long as you can live with the end result. Sometimes in life your younger family members need to live just as hard, so they can enjoy retirement rather than getting a helping hand from inheritance. If it is a matter of living with enough money to enjoy life in the end, then the potential removal of cash for use may be your best option.

As you search around for the best solution to fit your needs remember that drawdown, enhanced and home reversion are three other types of equity release products available to you on the market. They may fit your needs better than those at Stonehaven or not. Discuss all of this with a financial adviser to truly understand the full weight of your options and repayment needs.

Top tip: Read up on all of the thresholds for inheritance tax so you know how roll up equity release plans from Stonehaven affect you and your family in case you die. If you give out cash that is tax free now in small lump sums to your family it is not subject to inheritance tax. This could be a better benefit in the end. Also look at the benefits of interest only lifetime mortgages.

14
Feb

All Aboard the Income for Life Train

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Many people dream of the prospect of their retirement. However, in the current economic climate with quantitative easing measures which have compromised the real world value or pensions, a great number of people are worrying about the prospects for their retirement. Once you reach retirement age, the avenues to conventional finance can sometimes be closed to you. However, equity release schemes have been specifically designed for the over fifty-fives age group. This can enable you to release funds tied up in your property. Equity release calculator programmes are readily available to check whether you would qualify and how much you could expect to receive.

How Equity is Defined
Equity could be described as your stake in your property. Equity release calculator tools essentially calculate your equity by taking the balance of any outstanding mortgage from the value of your home. When you first purchased your property, you may have borrowed ninety per cent of the property price from the bank as a conventional mortgage. This would mean that you would have had ten per cent equity. As time passes and you pay off more of your mortgage, together with property prices increasing, you would find that you have more and more equity tied up in your home. For many retired people, they have little to no mortgage on their home, but may be struggling for actual cash.

For the purposes of equity release, many people can expect to release between thirty and fifty per cent of their equity as a lump sum or additional income. The reason for this is that the equity release loan requires no monthly payments. The interest on the loan is accrued and added to the balance of the loan in the form of compound interest. You are guaranteed the right to residency in your home for the rest of your life and the balance of the loan is only repaid once you have passed away, or if you move into a care home for the long term.

The Benefits of Equity Release
When considering equity release from your property, equity release calculator tools can highlight a number of benefits from specific equity release packages. However, there are numerous benefits to equity release which apply to the majority of schemes. These include:

  • Obtain a lump sum or an additional income stream: When choosing equity release, you will have the option of obtaining a tax free lump sum or an additional income. The equity release product allows you to borrow money against the value of your property to finance this sum. This can be very helpful if you are planning a large purchase such as a second home, need to supplement your pension or are looking to financially assist your children or grandchildren. There is no restriction to how you spend the lump sum or income; it is yours to do with as you please.
  • Improved lifestyle: For many people equity release is an effective method of improving their lifestyle. Essentially you have leveraged the value of your property in order to live off your investment. This can mean that you have additional disposable income without compromising your existing income. This could mean that you could take a once in a lifetime dream holiday or simply spend more time with your family. This type of scheme can allow you to fully enjoy your retirement without worrying about bills and finances.
  • Effective tax planning: Not only is your equity release sum tax free but you can use the funds to plan tax effectively. Many people opt for an income or draw down facility rather than a lump sum so that they can minimise their tax risk and not compromise their eligibility for certain means tested financial assistance. However, some people utilise equity release as a method of inheritance planning. By gifting money to your beneficiaries while you are still alive, you reduce the risk that they will need to pay inheritance tax when you pass away. The current inheritance tax threshold is set at £325,000. This may seem like a high amount but it will include the value of your property. By releasing the equity from your home, you can continue to live in your home but financially assist your family and help them to avoid paying inheritance tax in the future.

 

If you are interested in releasing equity from your property, equity release calculator tools can provide a good starting point for your research. They can provide you with details of schemes which you would qualify for and provide an insight into the maximum lump sum you would receive. This will enable you to have the information necessary to make an informed choice about proceeding forward with an application.