Worldwide Financial Planning

Peter McGahan answers readers' questions about equity release. There have been a few old tales circulating around equity release for many years, but those issues have disappeared long ago. Here are some of those questions addressed.

While the market is easily fooled by headlines so too, unfortunately, are central banks. The true state of the economy won’t be clear for months so policy makers have to make do with the data they have, while the impact of today’s decisions won’t be apparent for another year.

Using equity release is a very good way to reduce your estate for Inheritance Tax. If you release the capital, it is now a debt against your estate which reduces the estate and the debt roll up reduces the estate further.

The Fed further slowed the pace of its rate increases and raised by 0.25%, while the BoE and ECB increased by 0.5%. The ECB stood out for its clear commitment to future rate hikes (although it is slightly later on the curve than the US and UK), but the decisions and the explanations that followed helped to maintain the risk-on mood.

‘Equity’ is the gap between the debt you have on your property and its value. It has also been a great opportunity for salesmen to sell an ‘unequitable’ product for a commission.

US equity markets have been part of the general rise in risk assets in recent weeks and the publication of economic data that was worse than expected on Monday gave US equities a leg higher as this seemed to reinforce the view that the US Fed will soon slow its rate hikes.