Equity Release

Overview

Many retired people face a considerable drop in income which often means that they have to consider selling the home they love and moving into something cheaper and smaller. There is another alternative which could allow them to raise a substantial cash sum or a regular income whilst staying in their own homes without having to pay a rent or loan repayments for the rest of their lives. An Equity Release Scheme could mean the difference between a comfortable retirement and a constant worry about paying the bills.

Different Types of Equity Release Scheme

There are two main types of Equity Release Scheme:

• Lifetime Mortgages
  A lifetime mortgage is a form of equity release scheme where a loan is secured against your property to provide you with a cash to spend as you wish, typically with no monthly repayments to meet.
  
  Lifetime mortgages have become a highly popular form of equity release over the past few years, prompting many providers to offer a variation of a lifetime mortgage called a drawdown plan which allows you to release equity as and when you need it, rather than taking a lump sum or regular income.
  
  
• Home Reversion Plans
  With a home reversion plan you sell part or all of your home to a reversion plan company in exchange for a tax-free cash lump sum and a guaranteed lifetime lease with no monthly payments to meet.
  
  You stay in your home rent free for as long as you choose and are able to guarantee an inheritance to your beneficiaries. Both you and the reversion scheme company share in any increase in your property's value, according to the percentages owned.