Equity release allows individuals over 55, to release money from the property they live in, without having to meet any monthly repayments.
There are two types of equity release products available being ‘lifetime mortgages’ and 'home reversion plans’; both are regulated by the Financial Conduct Authority. The equity release products enable home owners to draw a lump sum, regular sums or both, from their home, while still living there.
You borrow against the value of your home, releasing a loan which can be used to provide an income, lump sum, or both. You retain full ownership of your home and the loan does not have to be repaid until you die or move into long term care. Interest is payable, usually at a fixed rate, and this can either be paid or ‘rolled up’.
Home reversion plans
In its basic form, all of part of your home is sold to a private company known as a ‘reversion company’, or a group of individual investors and, in return you receive a cash lump sum, an income or both. You will be able to remain in your house, without paying rent, for the rest of your life. When the property is eventually sold, the ‘reversioner’ receives the proceeds of sale, depending on what share of the property you have sold.
Equity release can provide an alternative solution, and fulfils a crucial role for many, in retirement funding. The market has a range of products available, and these are being continually refreshed and innovated; we would strongly recommend that you discuss your needs with a specialist financial adviser. Whether you need to release money to repay debts, adapt your home to enable you to remain living there, carry out crucial repairs, assist family with an ‘early inheritance’ or embark on the holiday of a lifetime, equity release may be able to provide a solution for you.
Our equity release experts will advise you fully on the meaning and effect of your product, including your rights and obligations, and ensure that you obtain advice on estate planning and wills, if appropriate.