Equity Release Schemes - Home Income Plan

Home income plan

 

By combining equity release schemes & annuities you can provide extra retirement income.

 

Home income plans allow homeowners to release equity built up within their property. This
release of equity, from either a lifetime mortgage or home reversion goes to purchasing an
annuity which provides the income for life. The home income plan will pay out an annuity
income dependent upon the size of the equity release, annuity rates, your age and gender.

 

Are Home Income Plans Still Available?

Popular back in the 80's, home income plans were mainly sold during a period of high interest & annuity rates.
Originally, the capital sum was provided by a residential mortgage, not an equity release scheme. The annuity
purchased would have been sufficient to fund the monthly mortgage payments & provide extra pension income.
Home income plans these days are rare. With annuity rates falling so far, there are better alternatives available.

 

Do home income plans involve risk?

There are many factors that have now rendered home income plans high risk. Firstly, mortgage rates could rise
sharply which would 'eat up' more of the annuity income, leaving less for income purposes. Annuity rates are
more favourable the older you are. Therefore, the home income plan is more appropriate for people over the
age of 70. With annuity rates falling, more of a tax free lump sum is required to provide the same income levels.

 

The amount of income generated by a home income plan is determined by the purchased life annuity. Annuities
have their own set of advantages and disadvantages:-

 

Advantages of home income plans

  • The income provided by the lifetime annuity is guaranteed for the rest of your life
  • A home income plan annuity usually provides a greater income than a stand alone annuity
  • The annuity income can be taken on a level, inflation protected or increasing basis
  • Tax free lump sums can also be taken from the lifetime mortgage or home reversion
  • The older the applicants, the greater the size of the annuity from the home income plan

 

Disadvantages of home income plans

  • Once the annuity has been purchased you have committed to its lifetime income & cannot change
  • If you die shortly after setting up the home income plan, then a capital loss can be incurred
  • Drawdown equity release schemes are now more flexible & do not require the capital injection
  • A home income plan can affect means tested benefits and grant entitlement

 

Independent advice available on home income plans

Due to the diversity of equity release schemes and the impact they can have financially on yourself, and your

beneficiaries, means that independent equity release advice is paramount.

 

To benefit from a free initial home consultation to discuss home income plans and any alternatives, please call

the Compare Equity Release team on 0800 678 5169 or find an adviser to book a convenient appointment.

 

 

The following areas provide further key retirement information regarding the release of equity from your home.

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These are lifetime mortgage & home reversion plans. To understand the risk & features of these plans, request a personalised Key Facts Illustration.

CompareEquityRelease.com helps you to compare and arrange equity release schemes with the following equity release companies:

Aviva | Bridgewater | Hodge Lifetime | Just Retirement | LV= | more2life | One Family | Retirement Advantage | Pure Retirement