Equity Release How it Works

equity release

For many people, an equity release policy can be a useful way of freeing up some much needed capital that is stored in their property.  It is a common issue for people nearing retirement age to be “property rich and cash poor”, and an equity release can potentially solve this problem.

 

How Equity Release Works

There are two main types of scheme that providers will offer equity release quotes on:

 

Lifetime Mortgages

  • You would continue to own your property up until your death or until you move permanently into a retirement home
  • You would receive a lump sum, or may have the option to defer some of the loan until later
  • When you die or move permanently into a retirement home, your property would then be sold to pay off your loan.
  • Unlike home reversion schemes, this type of equity release agreement will allow you to take out a loan against the value of your house, instead of selling a portion of the property directly.

 

Home Reversion Scheme

  • With a home reversion scheme, you would sell some, or all, of your property to a reversion company
  • You would no longer fully own your property, but could live there for the rest of your life as a tenant
  • You would receive a lump sum; if you would like a regular income, you could reinvest this
  • In some cases, you would be required to pay rent to the reversion company
  • The property would be sold when you die or move into a retirement home; the reversion company would take their share from the proceeds, while the rest is granted to your beneficiaries

 

If you require more guidance about how equity release works, our specialist advisors can help you.  It is highly recommended that you consider your equity release options carefully, as most schemes tend to be irreversible.

 

Please follow the link below for further information on these schemes and a competitive equity release quote.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Equity release may affect your entitlement to state benefits and will reduce the value of your estate. It may involve a lifetime mortgage or home reversion plan. All content set out in this website is provided for information only and should not be considered as advice. It is strongly recommended that you seek advice of a qualified, independent financial advisor before making any decisions to take out an equity release product.