Legal and General equity release

If you are looking to release some of the equity tied up in the value of your house, to help give you greater financial stability in your retirement years, Legal & General are one of the largest providers of equity release in the UK. They offer a range of insurance and investment management services through various strands of their company.

As members of the Equity Release Council, all loans taken out with them include a ‘No Negative Equity Guarantee’ which prevents the total amount of money owed from ever exceeding the total value of the property in question. In addition to this, Legal & General offer an inheritance protection option which allows the borrower to carve out a percentage of the property’s value that will be protected for those looking to inherit from the estate.

They also allow you to move to a new house while under their agreements as long as the new property in question is of sufficient value and adheres to the stipulations put forth in the initial agreement.

What do they offer?

General Requirements

Before you can enter into any of Legal & General’s equity release plans, you must ensure that you pass all of the following criteria:

• Over the age of 55.
• The property you wish to release equity from must be your primary residence.
• The value of the property itself must exceed £100,000.
• Anyone else living in the property must be made aware of the mortgage plan into which you are entering.

Flexible Lifetime Mortgage

Legal & General’s main plan is a Flexible Lifetime Mortgage. As the name suggests, the plan gives the borrower the freedom to choose how they receive the cash tied up in their home. It can either be withdrawn in one tax-free lump sum of cash or in several smaller increments. This allows you to choose which method of payment best suits your financial needs.

The minimum amount that can be loaned with this plan is £10,000 with the maximum amount being variable, calculated based on your age and the value of the property itself. Therefore. for more valuable properties this plan can be a good option over other providers who set an upper limit on the amount that can be borrowed.

This plan also includes the optional inheritance protection offer so that the when the loan is paid off upon the eventual sale of the property there can still be some money set aside for inheritance purposes.

Any repayments made early under this plan will incur early repayment fees.

Premier Flexible Lifetime Mortgage

The Premier version of this plan is, as the name suggests, a higher tier option. In this plan the minimum borrow increases drastically from £10,000 to £250,000 so this option is designed with the interests of those with more valuable properties.

Optional Payment Lifetime Mortgage

Designed to be taken at the end of an interest-only mortgage, this option is there for those who wish to release a single cash sum to pay off the remaining money. This plan includes the option to pay off some of the interest on the loan on a monthly basis via direct debit.

This is designed to reduce the overall payment due upon the sale of the property. However, it does mean that you would end up making both monthly payments and one (reduced) large payment down the road. The monthly payments are optional, however, as the name suggests, so they can be stopped at any time with the interest added on to the total amount at the end.

The minimum amount you take out through this plan is again £10,000 with the option of taking out smaller amounts at a later date, if necessary.

Income Lifetime Fixed Mortgage

Pitched as a way of bolstering your income in retirement, this plan is designed to give you your cash little and often. With four different plans available – 10 years, 15 years, 20 years, and 25 years – Legal & General aim to supplement your income with the equity released from your house over longer time periods.

The minimum initial cash sum on this plan is lower than the others at only £2,500. The money is then paid into your bank account on a monthly basis with a fixed interest rate applying across the board. As a result, this plan looks quite different to many other equity release plans which often look to release a large amount of money quickly to make one-off payments.

Should you go with Legal & General?

As with all equity release plans, whether they are the right thing for you is highly dependant on your own financial situation. The plans offered by Legal & General alone all vary significantly in what they offer and who they are designed for. Therefore, it is highly recommended that you seek the professional opinion of a financial advisor before entering into – or even deciding upon – any equity release plans.

While equity release plans are now significantly safer than they were in the 1980s due to new regulations – which Legal & General adhere to – there are still some concerns. While these plans do unlock a trove of otherwise inaccessible cash, they do so at a cost. The interest rates in question are high and will take a large chunk of inheritance away from anyone looking to receive the property after you pass away, even with the inheritance protection option.

While Legal & General overall have received good reviews with a 5 star rating from Moneyfacts, having won the Mortgage Strategy Awards in 2017, the reviews on their individual plans vary. Their Flexible Lifetime Fixed Mortgage plans all currently sit at 3 out of 5 stars on Defaqto. Their Optional Payment Lifetime Mortgages are only 2 stars and the Income Lifetime plans all have 1 star.

Legal & General Equity Release Calculator

If you wish to find a broad indication of the amount of money that you may be able to release from your property, Legal & General provide a calculator. By inputting your age and the value of the property they can give you an estimated amount that you may be able to borrow.

Do bear in mind that this amount may differ from the actual loans available to you.

Right for you

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Therefore, it is absolutely vital that you do not base any decisions about equity release plans on broad ratings but instead thoroughly research each plan individually, with the assistance of a financial advisor, to find the plan that best suits your lifestyle, needs, and current financial situation.

Legal & General Equity Release Plans