There are two main types of equity release available – lifetime mortgages and home reversion plans.
A lifetime mortgage is a way of releasing a lump sum from the equity in your home. They work by securing a loan against your property and don’t have a fixed term. The loan and any interest is repaid when your home is sold, so you do not have to make any monthly repayments. How much you can borrow depends on your age and the value of your home. With a lifetime mortgage, you keep ownership of your home and can still benefit from any price increases.
The interest rate is fixed when you start and the debt builds up as compound interest over the years.
We will search the market for you to find the best rates and options for your own scenario.
The fundamental difference between the two is when you take out a lifetime mortgage you still own your own home. But with home reversion plans, you actually sell a share of your home in exchange for a lump sum of money or a lifetime of regular income. This is usually higher than the sum you can raise from a lifetime mortgage. While all or part of your home will belong to someone else, you can remain living there for the rest of your life rent-free.
Home reversion plans are not loans and so there’s no interest to pay. However, if your property increases in value, you will only benefit from the increase in value of the proportion you still own.
Equity release may not be right for everyone. It may affect your entitlement to state benefits and it will reduce the value of your estate.