Equity release enables homeowners who are aged 55 and over to access some of the money tied up in their homes.
You can take the money as a lump sum or in several smaller amounts. Many people choose this option to supplement their retirement income, make home improvements or help children or grandchildren get onto the property ladder.
Lifetime mortgage
The most common way to release equity from your home is through a lifetime mortgage. This allows you to take out a loan secured on your property, provided it’s your main residence. You can ring-fence some of the property value as inheritance for your family and you can choose to make repayments or let the interest roll up. The mortgage amount, including any interest, is paid back when you die or move into long-term care.
Home reversion
A home reversion plan lets you to sell all or part of your home for a lump sum or regular payments. You can continue living there rent-free until you die, but you’ll have to pay to maintain and insure it. You can ring-fence some of the property for later use. At the end of the plan, the property is sold, and the proceeds are shared according to the remaining proportions of ownership.
Is equity release right for you?
Deciding to release funds from your home isn’t a decision to take lightly. While equity release means you have money to spend now instead of leaving it tied up in your property, it can be a complicated process. Remember equity release often doesn’t pay you the full market value for your home. And it will also reduce the amount of inheritance your loved ones could receive. It’s important to talk to an adviser who can help you decide whether the process is appropriate for you.
A Lifetime mortgage is a loan secured against your home. A Lifetime mortgage may affect your entitlement to state benefits, and it will reduce the value of your estate.
| You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone. This is a referral service. |