What types of equity release plans are available?
A lifetime mortgage allows you to release a lump sum of cash or extra income from the value of your property. There are no regular repayments to make as the amount that you have released, plus any interest is added to the initial loan amount. Generally this is when you die, move into long-term care or permanently leave the property.
This is similar to the standard lifetime mortgage. However, with the drawdown lifetime mortgage, you can access your money with more flexibility. Rather than just receiving a one-off lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these plans can often prove to be more cost-effective.
This is like a standard lifetime mortgage. However, you can choose to make repayments in full or on an ad-hoc basis to reduce the effect on the value of your estate. Some plans allow you to make repayments that are equal to or less than the amount of interest that is charged. The balance is paid off from the value of your estate once you have died or have moved into long-term care.
A home reversion plan allows you to exchange the ownership of some or all of your property for a lump sum of cash, along with the right to stay in your property, rent-free, for as long as you live. This is also known as a 'lifetime lease'. Because you can continue living in your home, rent-free, for life, you would generally receive an amount for your property that is lower than its market value.
Other alternatives to equity release
An equity release plan is not the only option if you wish to free up some cash in retirement. Downsizing the property, or borrowing money from a close friend or family member, could be a preferable alternative to releasing equity from the home.
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Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.
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As multi-award-winning equity release specialists we provide impartial advice covering your options as well as explaining what impact a plan could have on the size of your estate and if your entitlement to current and future means-tested benefits could be affected now or in the future.
We provide initial advice for free and without obligation. Only if you choose to proceed and your case completes would a typical fee of 2% of the amount released be payable.
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