What is equity release?
Equity Release is a way to unlock the value of your property and turn it into a cash lump sum or regular smaller sums or a combination of both, all while remaining in your own home.
You can do this via a number of policies which allow you to access – or ‘release’ – the equity (cash) tied up in your home, if you’re 55 and over.
How does equity release work?
Equity Release products fall into 2 main categories:
1) Lifetime Mortgage
This is the most popular and for those aged 55+.
This involves borrowing some of your home’s value at a fixed or capped interest rate.
You retain ownership of your home and interest on the loan is rolled up (compounded). The loan and the rolled up interest is repaid by your estate when you either die or move into long term care.
If you are part of a couple, the repayment is not made until the last remaining person living in the home either dies or moves into care, meaning that both you and your partner are free to live in your home for the rest of your lives.
Some ‘drawdown’ versions do allow you to pay back the interest (some even allow you to pay back some of the capital as well) so you can reduce the overall cost. With this type, you can take money out of your property a bit at a time up to an agreed amount – with interest charged on the amount you take, rather than the whole amount available.
2) Home Reversion Plan
You need to be aged 65+.
A Home Reversion Plan also allows you to access all or part of the value of your property while retaining the right to remain in your property, rent-free, for the rest of your life.
With a Home Reversion product the provider will purchase all or part of your house taking into account your age and your health and will provide you with a tax free cash lump sum (or regular payments) and a lifetime lease, guaranteeing you the right to stay in your property rent-free for the rest of your life.
There is no day-to-day interference and no restrictions on treating the house exactly as before; as a private home to live in freely.
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Did you know?
“Over 50% of our clients are referrals from other customers we have helped… we must be doing something right!”
Read these real life case studies of elderly people who have already benefited from equity release…
We helped one couple who released a large cash lump sum to give to their two children in order to provide the deposits for their first house purchases. The main benefit of this was that they got to see their children enjoying some of their future inheritance whilst they were alive and their children got the money when they most needed it.
We helped an older gentleman struggling to get by on his meagre pension. His car had stopped working but he couldn’t afford to replace it and some of his windows were rotting. Equity Release enabled him to replace his car so he could maintain his independence and also make some much needed home improvements.
We're here to help solve your case
There are many different options available and it is important that your current and future needs are matched with the right type of equity release plan. In addition, there are advantages and disadvantages in both types of plans so it is important for you to find out as much as you can and to get qualified advice.
We can also help you to establish how it might affect your tax position, your eligibility for means-tested benefits or your ability to move or sell your property in the future.
Once you have all the information you need and we have provided you with a personalised Equity Release Illustration, it is important to talk it over with your family to ensure you choose the best plan to fit your needs.