For most people their house is their biggest asset.
If you’re facing a pension shortfall, need to meet an unexpected expense or want to fund a retirement treat, equity release may be an option.
It allows you to tap into the wealth you’ve accumulated in your property without the hassle of having to move.
A specialist equity release adviser will explain in detail all of your options and the products available to you.
Equity release: types of scheme
There are two main types of equity release: lifetime mortgages, which allow you to borrow money against your house; and home reversion, whereby you sell a share in your house.
Equity Release is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration.
With a lifetime mortgage, you borrow a proportion of your home’s value. Interest is charged on the amount but nothing usually has to be paid back until you die or sell your home. The interest is compounded or ‘rolled up’ over the period of the loan, which means your debt would almost double in 11 years at current rates.
Home reversion schemes
With a home reversion scheme, you usually sell a share of your property to the provider for less than the market value. You have the right to stay in your home for the rest of your life if you wish. When you die or move into long-term care and the property is sold, the provider gets the same share of whatever your home sells for as repayment. For example, if you sold 50% of your property to the provider, it would get 50% of the sale price.
You can take out some lifetime mortgages from the age of 55, but home reversions are available only to people aged 65 or older. Equity release schemes are designed to be a lifelong commitment so it is important to understand all of the advantages and potential disadvantages before you make a decision.
Equity Release may require a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.