Equity Release products are designed for people over 55 to take cash value from their homes without having to move. There is a wide range of Equity Release products which can provide a valuable source of capital for some people.
For example, for those deemed mortgage prisoners i.e. those with an interest only mortgage that has fallen due for repayment but have no means of repaying it.
Equity Release enables people to stay in their home and benefit from the cash released from the equity of their property until certain events occur for example moving into long-term care or death. At this point the Equity Release provider will be repaid, usually through the sale of the property.
There are two types of Equity Release Schemes, Home Reversion Plans and Lifetime Mortgages.
With a Home Reversion Plan, an individual receives a capital lump sum in exchange for surrendering legal ownership or part-ownership of their home to the Equity Release provider. Since this lump sum is not a loan but rather a capital payment in full and final settlement for the proportion of the property that the individual sells to the Equity Release Provider, interest does not accrue on this sum. Please note, however, that we do not advise on such schemes.
With a Lifetime Mortgage, on the other hand, an individual receives a capital lump sum but does not surrender legal ownership of their home. In this case, that lump sum is a mortgage and thus, interest accrues on the sum owing. This interest can be repaid in full or part each month or alternatively allowed to roll up and compound which will result in the sum owing increasing year on year.
It is important if you are considering an Equity Release scheme to understand the differences between these scheme types and this is something we can help you with.
Equity Release can be very useful in some circumstances but it is essential to seek advice on whether it is suitable for you. We will help you understand if it is the right option for you, so please get in touch if you are considering an Equity Release scheme. We are experts in this market and will make sure you receive the right advice.
A lifetime mortgage is a long term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate
For a free, no obligation discussion and / or appointment, please contact Greville Phillips on 01245 323 436 option 2
Typically we charge a fee of £995 for arranging a Lifetime Mortgage, payable on completion to arrange your equity release product. We will also receive a commission from the equity release product provider in addition to the fees you pay.y.