There are a variety of Equity Release schemes available today. An independent financial advisor will be able to provide advice in selecting the best option for you. There are a number of types however the two main schemes are:
A lifetime mortgage
This is a loan secured against your home. Unlike normal mortgages, you do not have to make regular monthly re-payments. Instead the loan and interest are repaid by the sale of your property when you die or if you need to move into long-term care. The interest charged throughout the term is calculated on the total amount borrowed and the interest already added. This can quickly increase the amount you owe.
A home reversion plan
Instead of a loan secured on your home, with this type of plan you actually sell part, or all, of your home to the home reversion provider. In return they pay you a lump sum at the start of the plan and allow you to continue to live in the property with either no or minimal rent. It is unlikely that you will receive the full market valuation for the percentage of the property sold to the home reversion provider because you receive the lump sum up front and continue to have the benefit of living at the property. A number of these plans will also provide you with a regular monthly income. When you end the plan, die or if you need to move into long-term care, the reversion provider will sell the property, take their share of the money and pay the balance, if any, to you or your estate.
We will provide you with straight-forward advice on the legal technicalities of the scheme you choose, to ensure that you understand the implications an equity release plan will have for you during the operation of the scheme and the impact it may have to your family’s inheritance once you have passed on.