Depending on how long you have been a homeowner for, your property may contain untapped potential in the form of equity which has built up over the years. If you are looking to release this equity, our handy guide will help!
There are generally two types of equity release:
Life-time Mortgage
Otherwise known as a ‘roll-up mortgage’ this type of equity release is for homeowners aged 60 or above who have completely paid off their previous mortgage and plan on remaining in the property until they die or move into a care facility. The scheme allows you to release equity from your home in the form of a lump sum or regular monthly payments and will only become payable once you die or move into long term care. The loan will then be paid back through interest which has built up over the term of the loan and/or from the proceeds of the property sale.
Home Reversion
Under this scheme, homeowners (usually aged 70+) will ‘sell’ part or all of their property for a regular income or lump sum of cash. You can usually sell from 30% to 100% of the value of your home depending on which provider you choose and you will be allowed to live the rest of your days rent free in the property. Upon your death, your provider will take the percentage they lent to you from the sale of the property. It’s worth noting that if house prices rise sharply, the provider will be taking back considerably more than the amount they lent you initially.
With both of the above options, there is a opportunity to ring-fence a certain amount of the property value to leave as an inheritance to any next of kin or even for your own use later on in your life.
As with any big decisions concerning your home or future, it’s always a good idea to discuss various options with a trusted advisor to ensure you are making the right choice for you and your dependants. If you would like to make an appointment with our experienced team, you can contact us here.