Equity release refers to a range of products that let you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.
There are two equity release options:
- Lifetime mortgage: you take out a mortgage secured on your property provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family. You can choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.
- Home reversion: you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.
If you’re thinking of taking out an equity release product, you should take financial advice from an independent financial adviser.
All advisers recommending equity release schemes must have a specialist qualification.
So if equity release is the right choice for you, they’ll be able to suggest the plan that is most suited to your needs by researching all the products in the market.
At Mortgage Tree we provide a referral service to our Equity Release partners who will ensure that you get the best product to meet your needs.
Information taken from The Money Advice Service on 15/03/2018