Changes In Legislation Good News For Equity Release Loan Customers
Equity release loans, or lifetime mortgages, have become an important and popular part of many people’s retirement plans and are often used to either supplement income, or provide a lump sum to fund retirement, or to repay any outstanding existing loans.
However, one of the problems which can affect individuals taking out an equity release loan, is the effect it could possible have on their tax position and also on their possible entitlement to certain state benefits, as an additional lump sum, or extra income could take them above the threshold limits for these means tested benefits.
Over recent months, the Government has made alterations to certain rules which apply to the assessment of a number of benefits, which could mean that equity release loan customers could retain their benefits, or reclaim some benefits they had previously lost due to taking the loan. One particular benefit which has altered is Support for Mortgage Interest (SMI).
Borrowers could still qualify for this benefit, if their equity release loan was taken out to repay their previous home owner loan, or some other loans. Other changes include the rules on Assessed Income Period for Pension Credits and an increase in the capital threshold for Pension Credits, Hosing Benefit and Council Tax Benefit.
Andrea Rosario of SHIP (Safe Home Income Plans) said “Over the last nine months the Government has announced changes that we believe will mean that those consumers who wish to take out an equity release plan can do so in the knowledge that they may not see certain benefits reduce or cease altogether. All these moves mean that over 65’s may be able to make use of some or all of the equity in their properties to improve their standard of living in retirement without seeing their benefit payments drop or cease altogether.”
