Equity Release on a Freehold Flat

Equity Release on a Freehold Flat: Is It Possible?
Do You Own a Freehold Flat, & You’re Wondering if You Can Still Unlock the Equity Tied into Your Home. The Answers Lie Right Here…
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Introducing Equity Release on a Freehold Flat

Equity release plans were once only available to homeowners who had mortgages, but now anyone can use them so long as they have enough equity in their home.

This article will explore equity release on freehold flats and how it can be an attractive option to help you fund your retirement without having to sell up or move out of your home.

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What Is a Freehold Flat?

In case you’re wondering:

A freehold flat is a property that the owner owns outright.

There are no ground rents or other charges to pay on the ownership of this type of dwelling,

Which means it can be an attractive option for homeowners who want control over their homes and don’t have mortgages.

Freehold flats still need insurance against fire damage, as do all residential dwellings in England and Wales.

Still, they offer much more security than renting because you never have to worry about being evicted from your home due to contract agreements.

Can You Get Equity Release On A Freehold Flat?

The short answer is yes.

If you have enough equity in your property,

Then you can get an equity release plan for a freehold flat to help fund retirement or other purposes of your choice without having to sell up and move out.

There are two ways to do this:

Let’s have a look:

  • You could take out a Lifetime Mortgage that would allow for equity release in the future when your home is worth more than it was at purchase; or
  • You could buy an Endowment Policy to provide annual payments, which can be cashed before any of these events happen and turn into cash.

The benefits of using either method include access funds without having to sell up or move out of your property.

Still, there’s also the peace of mind knowing that if something happens then, surviving family members will have enough money available for things like funeral costs.

As with any insurance policy,

It’s worth checking the small print before committing because some plans come with hidden charges that might not be obvious at first glance but could cost more over time than expected.

But if you are eligible, this scheme makes sense compared to alternatives such as downsizing or moving into social housing, which may be unsuitable for your needs now or in the future.

Benefits of Equity Release on Freehold Flats

The benefits of getting equity release on a freehold flat are numerous and often come down to personal preference.

One thing you might like about this type of scheme is that there’s no risk or hassle involved in selling up because it only affects the value (not ownership) of your property.

Equity release plans also don’t require monthly payments, which means you can access funds without having to worry about any other ongoing costs such as repayments for mortgages or debt.

Now:

There may be tax implications, so these should always be considered –

Although studies show that all but one percent who takes out an equity release plan use the money for what they had planned anyway, it has less impact than people think it will have.

Another advantage is that you don’t have to worry about your property becoming difficult or impossible to manage in the future because there are no ground rents affecting eligibility.

Before committing, one more consideration is whether any friends or family members might benefit from the proceeds should something happen while they live on-site with you (such as disability).

It gets better,

It’s worth mentioning here, though, that if anything did happen,

Then surviving family members would be able to access funds without going through a long and arduous probate process, which can delay payments for months or longer.

There are also tax implications arising from equity release schemes, so it’s important to speak with an expert first and make sure everything is considered.

As well as this, it’s always worth checking the small print because some plans come with hidden charges that might not be obvious at first glance but could cost more in the long run than expected.

Are There Any Drawbacks?

Yes, there are a few drawbacks to these schemes, but they’re worth considering against the benefits.

The first is that your property will become more difficult or impossible to manage in the future because ground rents come into play.

So it’s not suitable for those with mobility issues which need caregiving assistance from family members.

Moreover,

Another disadvantage is that should you wish to move out, then selling up would be necessary –

Which could lead to less valuable offers when you do eventually find a buyer because of this scheme;

Unless you want to take out another equity release plan elsewhere at some point in the future (which might not always be possible).

Can I Get Equity Release If I Own A Share of the Freehold?

Yes, if you own a share of the freehold and want to release equity, this is possible.

However, some restrictions might be worth noting before committing.

Let me explain,

For example, you can’t take out an equity release plan on just part of your share because it needs to cover 100% –

So if children live with you or any other members who wish to stay in their current property at that time, they would also need to agree for them too not be included as beneficiaries.

Suppose these reasons put you off getting Equity Release on a Freehold Flat.

In that case, remember that downsizing is always an option, and moving into social housing may work out cheaper over time than paying fees through monthly payments for something else.

However, bear in mind that these schemes may be available in the future if you’re willing to wait a little while.

Can I Get Equity Release if There Is No Lease in Place?

Yes, if there’s no lease in place, then you can still get Equity Release on a Freehold Flat.

However, this might not always be the best option because your rights as an occupier will change.

So it could lead to complications later down the line when it comes to moving out of that property –

Especially if other people live with you who need caregiver assistance or support from family members living locally.

This is why we recommend discussing all options thoroughly with any relevant parties before deciding what to do,

Including how long they’re willing for their tenancy arrangement to last at present (the longer the period covered by a contract, usually six months or more, the better).

Another consideration worth mentioning here is whether anyone else is living with you, a co-owner of the property.

Now:

If this is the case,

Then there’s no guarantee that someone else will be willing to take on your share to release equity without further financial implications given how complex these schemes can be –

So it might not work out as an option for everyone or every circumstance.

Considerations Before Getting Equity Release on A Freehold Flat

Even if you’re retired, and in a good financial position,

It’s still worth weighing up all the pros and cons of getting Equity Release on your Freehold Flat before deciding what to do.

First, think about whether there will be any residual costs attached –

As some plans come with hidden charges that might not be obvious at first glance but could cost more in the long run than expected.

Here’s the deal:

Another thing to consider is whether children live with you or are beneficiaries of the property –

Because while these schemes can work out cheaper over time, they won’t always be an option if other family members need caregiving assistance from someone living locally,

So make sure everything has been discussed before making a final decision on what to do next.

If this means that Equity Release isn’t right for your Freehold Flat, then don’t despair as downsizing could be an option, too,

Although bear in mind that these schemes may become available again later down the line if you’re willing to wait around and see how things go.

What Is The Process For Equity Release On Freehold Flats?

First, you’ll need to organize a valuation of your property and any effects that may be included within the contract.

Second, search for an appropriate plan or equity release scheme that suits your needs –

And remember not all these plans work out cheaper than other forms of mortgage repayment over time.

Thirdly, once you’ve found one (or more) which could help with meeting your financial requirements,

Then make sure they’re suitable before proceeding in earnest by asking about things like exit penalties/fees and their terms & conditions;

As there are some schemes where it’s easy to get into debt without realizing it because hidden costs weren’t considered beforehand.

Finally, decide on what type of agreement best meets your needs based on factors such as what time you want to move out and your financial status;

For example, some plans allow people to stay in their homes until they die.

It’s worth considering equity release on a Freehold Flat if there are particular circumstances or needs which have arisen that mean this is the best option –

But be aware that while these schemes can work out cheaper than other forms of mortgage repayment over time, not all will provide any cost-saving benefits at all (especially when hidden charges are taken into account).

What does this mean?

This means it’s important to get advice from an expert before deciding what steps to take next so you know where you stand and whether Equity Release could be right for you.

Common Questions

Can I Get Equity Release on a Freehold Flat?

How Much Does Equity Release on a Freehold Flat Cost?

What Is the Problem With a Freehold Flat?

Is It Possible To Get Equity Release On A Freehold Flat If I'm Retired?

In conclusion

In a nutshell,

It’s worth considering equity release on a Freehold Flat if there are particular circumstances or needs which have arisen that mean this is the best option –

But be aware that while these schemes can work out cheaper than other forms of mortgage repayment over time, not all will provide any cost-saving benefits at all (especially when hidden charges are taken into account).

This means it’s important to get advice from an expert before deciding what steps to take next so you know where you stand and whether Equity Release could be right for you.

How Much Can You Release?

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Value of Your Home?

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