Equity Release is designed for clients in their mid-50s or older, who own their own homes outright (or have a small mortgage) and need extra cash or income thereby benefiting from the equity in their property without having to move out of it.
Essentially there are two types of equity release scheme, Lifetime Mortgage and Home Reversion.
Lifetime mortgages involves taking out a secured loan on the home, as a lump sum or income (or both).
The loan is repaid from the proceeds of the sale of the house upon death or when the property is vacated (perhaps because of the need for care.) The owner of the property, continues to be the owner.
Home Reversion involves selling all or part of the home to a third party, normally a reversion company or individual.
This means that all or part of the home belongs to someone else. In return is provided a regular income or cash lump sum (or both) with the client continuing to live in the property for as long as they wish.
Equity release refers to Home reversion plans and Lifetime mortgages. To understand the features and risks ask for a personalised illustration.
For equity release we can be paid by a fee, usually £1500 or by commission.
Lifetime mortgages can quickly erode the remaning equity and as a result there may be no value left to pass on.
Equity release schemes may work out more expensive than alternatives such as downsizing to a smaller property.
Equity release can affect eligibility for state benefits and grants