The first thing to note is that equity release schemes, equity release mortgages and lifetime mortgages are all one in the same thing, with the terms being used interchangeably.
Equity Release - A brief summary.
Equity Release is the term used to describe a financial solution that is available in the UK for those who are 55 or over, to release cash tied up in their home, without the need to meet an ongoing monthly mortgage payment. The term itself covers the financial sector, with Equity Release Schemes, Lifetime Mortgages and Home Reversion Plans being the actual products that are available.
- You can select from schemes that provide either regular payments or a cash lump sum.
- No monthly repayments to make, although some schemes may allow a payment.
- Any money released is yours to spend as you desire.
- No need to move home. You can stay in your home for life or for as long as you choose.
- Equity release schemes can be tailored to meet your specific requiremment.
- An equity release scheme can reduced the value of your estate for Inheritance Tax purposes.
- State benefits can be affected, so we provide access to a FREE equity release consultation to ensure you have all the facts.
Equity release is available in various shapes and sizes, but essentially, all provide the facility to release cash that is tied up in your home without the need to meet an ongoing monthly mortgage payment.
- To be eligible for Equity Release you must be aged 55-95 including couples
- Your home must have a minimum value of £50,000
- You need to be living in the UK or Northern Ireland
What are the different types of Equity Release?
Equity Release Schemes are split into three main products. These are lifetime mortgages, drawdown lifetime mortgages and home reversion plans.
In exchange for either a cash lump sum, or when available an ongoing monthly amount, a Lifetime Mortgage provides you with access to the equity tied up in your property without the need to meet any ongoing monthly payments. Upon death of the last survivor, the Lifetime Mortgage plus and rolled up interest is then repaid from the deceased’s estate or by sale of the property.
Like a standard Lifetime Mortgage interest is rolled up against the amount borrowed with a Drawdown Lifetime Mortgage. The big difference however, is that you do not need to draw down a large lump sum at outset, but can instead draw what you need when you need it. This provides a way to reduce the amount and speed at which interest accrues against the loan.
A Home Reversion plan offers you the choice to sell all or a part of your property to a Home Reversion Company in exchange for a cash lump sum. There are no drawdown facilities,. but also there is no rolled up interest to account for
For more information on the different schemes you can request a copy of the FREE equity release guide which we will post out to you, or you can request that an advisor calls you to book your choice of either a telephone consultation, or a home visit.