Partnership Equity Release
If you are near or already in your retirement you might have been looking at ways you raise your capital whether it’s to pay for something big like home improvements or to just make yourself feel more financially stable. If you are a home owner one such way you could do so is through an equity release scheme such as a lifetime mortgage from Partnership.
A lifetime mortgage is one way you can access some of the capital your home is worth without having to sell or move.
They essentially work by taking out a loan secured on your home. Instead of making monthly or annual repayments on the loan it gets repaid along with any interest that has accumulated when your home is sold after you die or move into long-term care. In most cases if there is any revenue left over once the loan has been repaid it can be passed on to your loved ones.
If a plan is registered with the Equity Release Council it carries a ‘no negative equity guarantee’ this means debt from the loan cannot be passed on in your estate. So if the amount you owe becomes greater than the value of your home you will never be charged more than it sells for.
There are three types of lifetime mortgage
- Roll up – full amount including any interest is repaid when your home is eventually sold. As this plan features compound interest the amount ultimately needed to be repaid can increase very quickly.
- Interest only –Gives you the option to make monthly interest repayments reducing the interest accumulating on the loan.
- Fixed rate – Unlike the other two plans a fixed rate lifetime mortgage does not feature any interest rates instead you will agree on a higher sum that will be repaid when your home is sold.
If you are thinking about a Lifetime mortgage you should also consider if home reversion is better for you. This gives you the chance to sell all of your home or a part of it to a reversion company for less than its market value. They will in return pay you a lump sum or a regular ‘income’ payment and guarantee you the right to stay in your home. They will not sell it until you die or move into a care home.
Some reversion plans require you to make monthly rent payments, all though at a reduced rate than you would expect to pay as a normal tenant. Others will let you stay in the property for free.
What to consider
Lifetime mortgages and home reversion schemes are in most cases lifetime commitments that will reduce how much you can leave behind to your beneficiaries. It is not the right choice for everyone and you should consider alternatives well before deciding.
There are several equity release products available on the market, Partnership equity release is just one of many.
To find out more about the different types of equity release and which one is right for you, simply click on the link and fill in the quick form and an equity release specialist will get back to you with free, no obligation quotes and advice.