The value of your home, minus any outstanding mortgage you may owe, can be described as your 'equity'. Equity release is the process of unlocking some of this value, turning it into a tax-free lump sum of cash or a regular additional income. You could then use this to pay for one-off purchases, to improve your lifestyle or to help loved ones.
An equity-release plan is the easiest and most popular way to access extra cash without having to move home. With nearly all equity release plans there are no repayments to make and with the most popular form of equity release, a lifetime mortgage, you continue to own all of your home.
If you are aged 55 or over and own your own home you could be eligible to release money from your property.
Equity release should only be considered once all other alternatives have been explored.
Why has equity release become so popular?
Despite recent ups and downs in property prices, there is every chance that your home is still your biggest asset, and is worth considerably more than you paid for it. House prices have, on average, doubled roughly once every eight years since 1950 - a rate that vastly outweighs the increase in income and living costs over the same period. As a result, many millions of Britons who may have reached or are approaching retirement age, now find themselves with a wealth of equity that far outweighs their savings and income.
Do you qualify?
If you are a homeowner aged 55 or over, you could be eligible to take advantage of releasing equity from your property. Equity release can significantly improve your financial situation, giving you a more comfortable retirement.
Types of equity release schemes
Although there are many different plans available, they can all be split into four main categories of equity release schemes.
Lifetime Mortgage
You release a lump sum from the value of your property, whilst maintaining 100% ownership of your home. This amount, plus any interest accrued, is repaid from the sale of your property when you pass away or move into long-term care.
Drawdown Lifetime Mortgage
This is similar to a lifetime mortgage, but with added flexibility. The cash can be released over time, as and when you need it. Because you only accrue interest on the funds once you have taken them, this can reduce the amount you pay over time (when compared with a lump sum).
Interest-Only Lifetime Mortgage
This is like a standard lifetime mortgage; however, you make regular payments so that the amount you owe remains constant. This amount would then be paid from the sale of the home, typically once you have passed away.
Home Reversion Plan
Here, you sell some or all of your property in exchange for a lump sum of money, whilst maintaining the right to remain living in your home, rent free, for as long as you live.
Choose the right equity release scheme for you...
To ensure you get the most benefit from equity release, it's really important you choose the best plan to suit your individual needs and circumstances. Our qualified advisors can explain each option to you, and provide you with a full, written equity release recommendation without any obligation.
There's never any obligation on your part and, if we think equity release is not suitable for you, we'll tell you straight away.
Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks ask for a personalised illustration. Before you proceed with releasing equity, please ensure that you've read our list of things to consider about equity release.