How to release equity from your house

Equity Release

If you are retired or thinking of retiring you might have been looking into ways of raising some funds to make yourself more financially comfortable. One such way is unlocking some of the wealth tied up in your property with an equity release plan.

Types of equity release:

There are two main types of equity release plan.

Lifetime mortgage

A lifetime mortgage works by taking out a loan for a percentage of your home’s value, typically up to 56%. You don’t have to make any repayments on this loan instead when you die or move into a residential care home the loan is repaid along with any interest on it through the sale of your home.

There are three different types of lifetime mortgage:

  • Roll-up – In a roll-up mortgage there are no monthly or annual repayments at all the whole amount you originally plus the interest that has accumulated on it is repaid through the sale of your home.
  • Interest-only – Interest only mortgages gives you the option to make monthly payments on the interest on your loan, the original sum borrowed is still repaid through the sale of your home.
  • Fixed repayment – in a fixed repayment plan you don’t need to worry about interest. During your application process you will agree with the lender how much more will be repaid to them through the eventual sale of the property.

Home Reversion

Home reversion is an alternative to lifetime mortgages. With a home reversion scheme you sell your property for less than its market value for either a lump sum or regular ‘income’ payments. In return the home reversion company will guarantee you the right to continue living in your home indefinitely until you either die or move into a care home. Some providers will ask you to pay a monthly rent but this will be at a reduced rate, others will allow you continue to live in your home for free.

How much equity could you release?

The exact amount of equity you may be able to release will principally depend on the value of your property however when calculating how much they are willing to give you the lender or reversion company will also take into consideration other factors such as;

  • Whether it is a single or joint plan
  • Your age
  • Whether you would like to leave any of your property’s value behind to your beneficiaries

Is equity release right for you?

Equity release is a long-term commitment and not for everyone, It will decrease the size of your estate. Therefore when deciding if equity release is right for you or not it is important to consider all of your options as well as possible alternatives. To find out more about the different types of equity release the link and fill in the form and an equity release specialist will get back to you with free, no obligation quotes and advice.

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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.