Do I have to take out cash to release the shares all at once? - Z News

Developments in the share issuance market mean that borrowers can now get their money in phases rather than in a lump sum. In this week’s Q&A, Mark Gregory gets the lowdown on how this works and how it affects cost

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Question

I’m a 64-year-old woman, and I’ve decided it’s time to release some equity from my house, worth £250,000. It is a three bed terrace and is in good condition.

I wondered how much I could release and whether I should take the money as a lump sum? If so, will I receive advice on the sensible investment of this money? Thanks for your thoughts.

Mark’s answer

Thank you for your question. You don’t have to take all of your equity release money at once. Personally, I’m done 25 years of experience In Equity Release, one of the biggest changes I’ve seen is how much the lifetime mortgage market has evolved, with more flexible features designed to meet changing customer needs.

One of these major developments is Towing facilitywhich allows you to release money in stages rather than taking one large lump sum at the beginning.

A modern flexible lifetime mortgage can include features such as:

retention 100% ownership From your home
A A tax-free lump sum
A Cash reserve/withdrawal facilities
Fixed interest rates For the duration of the plan
Inheritance protection options
Flexible voluntary payments, including monthly or ad hoc payments or no payment at all
Fixed early payment fees, depending on the product

Based on your age 64 And the value of the property around it £250,000the advisor will be able to calculate the amount you may be eligible for release. The exact amount will depend on your age, property value, lender criteria and, in some cases, your health and lifestyle.

How does withdrawal work?

together Lifetime mortgage withdrawalthe lender first calculates the total facilities that may be available to you. This mainly depends on your age and the value of the property.

Once you know this comprehensive facility, you can choose how much tax-free money you want to receive initially. The remaining amount is then kept in Cash reserve facility With the lender.

If you need more funds in the future, you can request another withdrawal. They are often available in smaller amounts, and in many cases, lenders do not charge additional application or administrative fees for taking money from reserve.

The main advantage is that you only pay interest on the money you have already released, not on the money in reserve. This can help reduce the cost in the long run compared to taking a larger lump sum on day one.

It is important to note that the interest rate on future withdrawals is usually set at the rate available at the time of each withdrawal, and not necessarily the rate applied to your original issue.

Take the money in stages, not all at once

A lifetime mortgage drawdown can be helpful if you don’t need all the money right away. Instead of taking a large lump sum at the beginning, you can take an initial amount for your immediate needs and leave the remaining facility with the lender until it is needed.

This means you only pay interest on the money you have already withdrawn, which can help reduce costs in the long term and avoid unnecessary capital sitting on deposits.

The issuance of shares should not be used merely to raise funds for investment purposes. Your advisor will discuss why you need the money, how much you need now, and whether a lump sum or withdrawal method is more appropriate for your circumstances.

To find out what you can release initially, and how much can be kept in reserve for the future, I recommend speaking to a specialist advisor. Our friendly and expert consultants They can provide clear numbers and explain your options without commitment.

Alternatively, please contact the Equity Release Supermarket team on 0800 802 1051.

Meet our expert…

Mark Gregory, Founder and CEO Supermarket stock issuehere to answer your questions. Mark is himself a consultant with over 20 years of equity issuance experience.