Equity release loans allow home owners aged 55 and over to release money from their property without being forced to make monthly repayments.

There are two main types of equity release product – lifetime mortgages and “home reversion” plans.

Lifetime mortgages allow you to take equity from your home in a lump sum, or in smaller, regular amounts. Typically, the interest on the loan is rolled up and repaid by your estate when you die or move into long-term care. If you are part of a couple, the repayment is not made until the last remaining person dies or moves into care.

With some plans you can choose to pay the interest monthly. Doing so drastically reduces the total interest owed because it is not compounded over time.

Home reversion plans allow the lender to buy all or part of your home in exchange for a tax-free cash lump sum or regular payments and a lifetime lease. This gives you the right to continue living in your property rent-free for the rest of your life.

At the end of the plan the property is sold.

With a home reversion plan you give up ownership of the property, but you know exactly what value you are getting for your home. With a lifetime mortgage, the total repayment due at the end of the loan could be far higher than anticipated.

 

What is equity release?

 

Equity release loans allow home owners aged 55 and over to release money from their property without being forced to make monthly repayments.

There are two main types of equity release product – lifetime mortgagesand “home reversion” plans.

Lifetime mortgages allow you to take equity from your home in a lump sum, or in smaller, regular amounts. Typically, the interest on the loan is rolled up and repaid by your estate when you die or move into long-term care. If you are part of a couple, the repayment is not made until the last remaining person dies or moves into care.

With some plans you can choose to pay the interest monthly. Doing so drastically reduces the total interest owed because it is not compounded over time.

Home reversion plans allow the lender to buy all or part of your home in exchange for a tax-free cash lump sum or regular payments and a lifetime lease. This gives you the right to continue living in your property rent-free for the rest of your life.

At the end of the plan the property is sold.

With a home reversion plan you give up ownership of the property, but you know exactly what value you are getting for your home. With a lifetime mortgage, the total repayment due at the end of the loan could be far higher than anticipated.