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In the last blog we spoke about the confusion of the term Equity Release. From here on it will be referred to as Later Life Lending or LLL. In this blog we will see if LLL is for you. It won’t cover every aspect because people have different circumstances, different reasons and different needs, but hopefully it will give you an insight to help make a decision or discuss further with your family. 
Ideally LLL is suited to those who are asset rich and cash poor - those who have a property but very little income. For LLL you don’t need to prove a minimum level of income, perhaps more the opposite – show there is no income! There is no need to be subject to the ‘can you afford this mortgage’ test like you did 30 or so years ago. 
 
Some of the reasons people enter into LLL is to either pay off a debt, create money to cover some future expenditure or create an income stream to supplement their lifestyle. 
 
What type of debt I hear you ask? In the mid 70s and 80s it was very popular to have an interest only mortgage that was linked to an endowment policy. The endowment policy was, supposedly, designed to be an investment that would grow over a number of years to a sum where it would repay the outstanding balance of the mortgage. Unfortunately, most of these endowment policies have performed very badly and won’t cover anywhere near the amount they were designed to. This is where LLL can be used to repay the outstanding balance rather than have to sell the property and move to a smaller property. 
 
Create money for what ? This could be for house renovations, new windows, a much needed new boiler or perhaps to fix a leaking roof. You may wish to help your children, nephews, nieces buy a property or get further education. You may want a new car or travel the world while mobility and health is still good. The list is endless! 
 
What’s an Income stream ? Your mortgage may be paid off, but maybe you have no private pension and totally rely on the state pension but that isn’t enough for you. Maybe you want to retire early but are still too young to claim the state pension. LLL can create a regular income for you just like a private pension or state pension would have done. 
 
What if I want LLL and it’s none of the above? Can I still do it? That really would be down to why you want to LLL. It’s not something that should be entered into lightly, it is a financial contract and it will affect your wealth and what you’ll leave to your beneficiaries once you are no long alive. 
 
LLL should always be discussed with your family. They may be unaware of your struggles and may be prepared to help you financially. From there it should be discussed with a professional, qualified, mortgage advisor who covers not only LLL but also standard residential and Retirement Interest Only (RIO) mortgages. This will provide complete market coverage of the types of products available and most suitable. 
 
If any of this is of interest to you and you’d like a no obligation informal conversation with a qualified advisor,please get in touch on 07788 219647 or email john.stallan@hdconsultants.net 
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