What is an Equity Release
Equity release is a way of releasing the wealth tied up in your property without having to sell it and move to another home. It is designed to help homeowners aged 55years or over who either own their property outright, or have relatively small mortgages left to pay.
Different Types of Equity Release Schemes
A lifetime mortgage allows you to release a lump sum of cash or extra income from the value of your property. There are no regular repayments to make as the amount is repaid from the money made when the property is sold. Generally this is when you pass away, move into long-term care or permanently leave the property.
Drawdown lifetime mortgage
This is similar to the standard lifetime mortgage. However, with the drawdown lifetime mortgage, you can access your money with more flexibility. Rather than just receiving a one-off lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these plans can often prove to be more cost-effective and at the same time provide peace of mind that there are funds for future needs should they arise.
Interest-only lifetime mortgage
This is similar to a standard lifetime mortgage, however, you can choose to make repayments in full or on as and when you like to reduce the overall cost and impact on the value of your estate.
Some plans allow you to make repayments that are equal to or less than the amount of interest that is charged. The balance is paid off from the value of your estate once you have died or have moved into long-term care.