Equity Release is now a popular and often essential part of retirement planning.
It can be used by anyone who is over the age of 58 and who owns a property valued at more than £80,000. They can be used for many purposes but some of the most popular uses include repaying interest only mortgages, raising capital to help family to provide a larger deposit to purchase a property or to complete other lifetime plans. Equity Release products are now very carefully regulated and fully transparent, with information and illustrations that cover every detail of the plan before you decide to proceed.
The amount you are able to borrow depends on your age and the value of your property. The older you are the more you can borrow but it is usually best to start with a small amount and ask for more when it is required so as not to pay interest on money you don’t yet need
The main types of Equity Release are;
There are two main types of Lifetime mortgage:
There are several lenders who specialise in Lifetime mortgages. Their documentation and illustrations are straightforward and simple to understand but it is essential to seek advice from a Lifetime Mortgage/ Equity Release qualified adviser. You will also need to choose a solicitor who will provide independent legal advice and guidance.
Under a Home Reversion plan the customer sell all or part of their home to a reversion provider in return a cash sum together with the right to continue living in the property for life or until a specified event occurs, such as moving into residential care. On death the property is sold and the reversion provider retains the proceeds unless it is a partial reversion where the value of the consumer’s outstanding beneficial interest passes to the consumer or their estate.
This type of scheme is rarely suitable because most people are not comfortable with selling all or any part of their property in return for a heavily discounted lump sum. However they are used sometimes by people who require a larger sum then the Lifetime Mortgage provider can provide or by people who have no beneficiaries.