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<p class="NewsHeading">Reaching fiftyfive</p>
<p class="NewsSubHead">One of the advantages of reaching 55 is that you are eligible for Equity Release providing you have money tied up in your home.</p>
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<p>True Equity Release means trading down from a larger more expensive property to a smaller less expensive one thereby releasing ‘value‘ in the process. If this is not possible or desirable you can raise equity finance through what is known as a Lifetime Mortgage, an increasingly popular way to raise money, or through a home reversion scheme. Lifetime mortgages now make up the bulk of the equity release market today with the remainder coming mostly from home reversion schemes. With a Lifetime Mortgage money is borrowed from the lender, normally a building society, and the interest on the capital sum is rolled up so that you only have to pay the loan and interest back when you sell. If you or I were not yet 55 and wanted to take out a home improvement loan for say £15,000 from a friendly bank, we could probably do so perhaps at a rate of 6.5% but we would have to pay back the loan and interest over a five year period which comes to something like £300 per month plus other expenses such as security insurance for the loan. You would also have to convince the bank you had enough income to pay off the loan. With a lifetime mortgage of the same amount you would probably pay a similar rate but the interest just goes on accumulating until you call it a day. You don‘t have to show you have a suitable income to cover the loan. Home reversion plans are a little more tricky as they are not loans as such : you actually part with some of your property (not in a physical sense) and once its gone, its gone forever. A home reversion scheme is essentially a sale and leaseback arrangement whereby you continue to occupy that part of the property which you have ‘sold‘ whilst you live and when you die that part belongs to the home reversion company. The difficult part comes in agreeing the value of the sum released as a percentage of the current value of the property. This is very much dependent on the age of the borrower and the liklihood or not of the lender getting his money back within a certain time period. <B>Independent financial advice is essential.</B></p>
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<p class="NewsHeading">Save up to ?3,600 each year</p>
<p class="NewsSubHead">In the UK anybody can save up to ?3,600 each year and take advantage of tax relief</p>
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<p>Saving £3,600 a year into a pension scheme allows you to take advantage of tax savings. However for those about to invest in equities a good self assessment of risk is necessary as whilst equities can be a good long term investment they can also prove worryingly volatile in the short term. For those who are risk averse fixed interest bonds and gilts are probably a better bet. If you wish to dispose of some of your savings you can gift up to £3000 to any one person each tax year without having to pay tax<B> . Always take independent professional advice.</B></p>
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