Beginners guide to Equity Release Loans
Equity release loans can help you if you’re looking to raise a lump sum of cash for a costly purchase like a new car or home improvements, or simply consolidating some debts and credit cards to bring down those steep interest payments. Loan rates have never been lower than they are right now, and equity release loans are a safe and secure way to release some of the value locked in your house.
Types of equity release loans
There are three main types of equity release loans, and within each of these are various different plans.
- Lifetime Mortgage – the most popular type of equity release loans, these allow you to free a lump sum from the value of your property, with the amount released plus any interest accrued repaid out of your estate when you pass away or move into long-term care.
- Drawdown Lifetime Mortgage – very similar to a lifetime mortgage, but with added flexibility, as your money can be released in instalments, as and when required, which can reduce the amount of overall interest accrued.
- Home Reversion Plan – you give up ownership of part or all your property in exchange for a large lump sum of money but with these type of equity release loans you have the right to live in your house, rent free, for as long as you live.
How equity release loans work
With an array of different equity release loans offering lump sums and/or regular income, they all work on the same principle: they lend you a part of your home’s value in return for a share of the proceeds when you pass away or move into care. Generally you will need to be 55+, have little or no outstanding mortgage and own a property in reasonable condition.
The amount of equity you will be able to release depends on the value of your property and your age. There is no maximum age limit for equity release loans. In many cases, the older you are, the more cash you are eligible to release from your property.
Equity release loans can provide many benefits depending on your individual needs and circumstances so to help you decide which type of loan is best for you talk to an independent equity release advisor.
For no-obligation advice on whether equity release could help you and information on the best plans please call our 24 hour helpline and speak to one of our advisors:
Or use the comments box below to ask a question.
Equity Release may involve a Lifetime Mortgage or Home Reversion Plan. To understand the features and risks ask for a personalised illustration.
Age Partnership provides initial advice at no cost and without obligation. Only if you choose to proceed and your equity release case completes would a typical fee of 1.5% of the amount released or £795 be payable.
Important things to consider about equity release:
- Equity release could affect your current or future entitlement to means-tested benefits
- Releasing equity to spend in your lifetime can reduce the amount that is left in your estate when you pass away
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