If you wish to free up tax free cash that is currently tied up in your home, you may be considering equity release.
As the name suggests, ‘equity’, using part of the value of your home, is ‘released’ to you as a cash payment – either as a lump sum or as regular income. It can be an attractive option if you aren’t keen to move house or make monthly interest payments on a second mortgage.
Equity release works rather like a reverse mortgage. It provides cash now to spend as you wish, with the interest on the money borrowed against the value of your home only repaid after you’ve died or moved into long term care.
Types of equity release
There are two main types of equity release:
- Lifetime mortgage – money is borrowed against the value of your home.
- Home reversion plan – money is released by selling all or part of your home while you continue to live in it. The property is then ‘leased’ back to you either rent-free or on a peppercorn-rent basis.
Both options include two very important guarantees:
- A guaranteed right to remain living in the property that you have released equity from, either for life or until you need to go into long term care.
- No negative equity – guaranteeing that the amount needed to repay the equity release plan can never exceed the value of the property itself, meaning no debt can ever be left behind for your beneficiaries.
How much can I borrow?
The amount you can borrow depends on your property’s value (minimum £60,000) and your age (you and your spouse should both be over the age of 55).
The good news is that there are some providers that do not have a maximum age limit so you are never too old to consider equity release.
We only use providers who are members of the Equity Release Council.
It is very important to weigh up your alternative options, before deciding if Equity Release could be the right choice for you.
To find out if equity release might be a suitable option for you, please contact us.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Equity Release mortgages are arranged by Introduction only.