So what is an Equity Release scheme? Equity Release is a term given to schemes that 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, subject to a maximum which is dependent upon your age and property value. The money raised through an equity release plan 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.
Equity Release, unlike a traditional mortgage, offers the option of making no repayments until you or if later, your spouse, dies or needs to move into Long Term Care at which point the house is then sold, the loan repaid and any balance paid to your estate. Whilst releasing equity in your property at the moment, will inevitably reduce the amount of equity which will be left for you or your beneficiaries to inherit, by providing either a lump sum, extra income or both, equity release can often make the difference between retirement being a struggle and being more enjoyable.
There are two different types of Equity Release Schemes:
- Lifetime Mortgages
- Home Reversion Plans
Lifetime mortgages can either take the form of:
- Lifetime Roll Up Mortgages (where no monthly mortgage repayments are required)
- Interest Only Mortgages where monthly repayments are required)
- Home Income Plans
All equity release products involve borrowing against, or selling all or part of your home, and may work out to be 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. One of our equity release advisers would be pleased to assess this before recommending a scheme for you.
For a more detailed description of each type of equity release, then please click on types of equity release.
Now take a look at the benefits of equity release.
This website refers to home reversion plans and lifetime mortgages. To understand the features and risks, ask for a personalised illustration.
