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Equity Release Schemes from The equityRelease Centre
Equity Release schemes help homeowners release some of the capital tied up in their home without the need to take out a traditional mortgage or move. Equity release schemes allow you to choose how much equity to release dependent upon your age and property value.
If you are single or divorced and your estate is currently worth more than £312,000 (2008/9) or If married or widowed and your spouse /late spouse leaves you everything (£624,000 2008/9). In these cases releasing equity from your house could also help to reduce the value of your estate below the Inheritance Tax threshold. However, due to the interest accumulated on the loan, the cost of equity release could exceed the amount of Inheritance Tax saved. The money released can be used for whatever purpose you want, whether that is to replace your car, do home improvements or provide extra income, the choice is yours.
There are four different schemes:
- Equity release - lifetime Roll Up Mortgages
Under these schemes you keep full ownership of your property but you obtain a secured loan paid as either a lump sum or monthly income (or both) and you pay nothing back during your or the last survivor (if joint application) lifetime, or you finally give up owning a home whichever is the earlier.
Unlike a traditional mortgage, these schemes offer the option of making no repayments until death or needing to move into Long Term Care at which time the house is sold, the loan repaid and any balance paid to your estate.
To find out more about Lifetime Roll Up Mortgages click here.
- Equity release - interest only mortgages
There are a few Building Societies and Banks that are prepared to offer ordinary Interest Only Mortgages for life to retired people, to allow them to release capital. Interest Only Mortgages mean that you only repay the interest not the capital to the lender, therefore, the monthly repayments can be relatively affordable. To find out more about Interest Only Mortgages click here.
Your home may be repossessed if you do not keep up repayments on your mortgage.
- Equity release - Home Reversion Plans
This type of scheme allows you to sell part or all of your property to a provider in return for either a lump sum or income and a lifetime right to remain living in your property. You can sell up to 100 per cent of the value of your property, but you will only receive a heavily discounted sum of money which could be as low as 25% per cent of the current market value at age 65% rising to typically 60% at 91 years of age. The provider discounts the amount of cash as compensation for the fact that they may have to wait many years before receiving their money back on your (or in the case of joint applications, the last persons) death or need to move into care. When the house is eventually sold, the lender receives his percentage of the sale price, not just the market price at the time the arrangement was agreed. To find out more about Home Reversion Plans click here.
- Equity release - home income plans
Under these schemes you take out a an Interest Only Lifetime mortgage for a percentage of your property,
with a provider who in return gives you an annuity (a regular income for the rest of your life based on your age and sex). Unlike a reversion scheme you automatically have the interest on the loan deducted from the annuity payments each month. To find out more about Home Income Plans click here.
However there an increasing number of providers all offering slightly different variations and therefore getting Independent advice can save you pounds and prove invaluable. For a comparison of the various different equity release schemes click here.
All equity release products involve borrowing against, or selling all or part of, your home and may work out more expensive in the long term than downsizing to a smaller property, and may affect your entitlement to State benefits and grants. There may be more suitable methods of raising the funds you need.
If you would like to receive impartial advice on whether an equity release scheme is suitable for your circumstances, and if so which is the best scheme for you, then please contact us by emailing The equityRelease Centre, completing our equity release enquiry form, phoning 0118 958 8810 or by visiting The equityRelease Centre home page and following the links from there.
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