What types of equity release plans are available?
A lifetime mortgage allows you to release a lump sum of cash from the value of your property. With this type of equity release plan there is no requirement to make regular monthly repayments as the amount that you release, plus any interest accrued, is repaid from the money made when the property is sold. This happens when you die, move into long-term care or permanently leave the property.
Drawdown lifetime mortgage
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 equity release plans can often prove to be more cost-effective.
Interest only lifetime mortgage
This sort of equity release plan is like a standard lifetime mortgage. However, with an interest only lifetime mortgage you can choose to make repayments in full or on a regular 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 and the interest accrued is paid off from the value of your estate once you have died or have moved into long-term care.
Home reversion plan
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 subject to the lenders terms and conditions. This is also known as a ’lifetime lease’ and is only available to those who are aged 65 or over. Age Partnership’s equity release team can provide further information and advice regarding home reversion plans.
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.
Please call us today for a no-obligation chat on Freephone 08080 555 222. Our friendly advisors are ready to answer any questions you may have.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. To understand the features and risks, ask for a personalised illustration.
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Things to consider
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 2.2% of the amount released be payable.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.