If you are over 55 years old and want to have some extra money – perhaps to secure an inheritance for your family - you can release some of the equity tied up in your home and take it as a large lump sum, a number of small amounts, or a mixture of both. Equity release allows you to access that portion of the money tied up in your home without having to sell the property.
In the main, there are two equity release options:
Lifetime mortgage
A lifetime mortgage is one where you take out a mortgage secured on your property provided it is your main residence but you still retain ownership of your home and of course, can continue to live there.
Depending on the lender chosen, you can then choose to make repayments on that equity released or let the interest roll-up over time. The loan amount and any accrued interest is then paid back when you pass away or when you move into long-term care.
Lifetime mortgages are very complex and only CeRER qualified mortgage brokers can give advice on these types of mortgages.
Home reversion
A home reversion mortgage is different in that you sell part (a percentage) or all of your home to a home reversion provider in return for a lump sum (or regular payments). You are still given the right to continue living in the property until you pass away, rent-free, but you have to agree to maintain and insure it.
If you sell a percentage of your home, the percentage you retain will always remain the same regardless of the change in property values, so if the property value, for example, goes up, the home reversion provider also benefits from that increase in value in the same percentage as do you.
At the end of the plan your property is sold and the sale proceeds are shared according to the percentage of ownership retained by you and the home reversion provider.
Home reversion mortgages are very complex and only CeRER qualified mortgage brokers can give advice on these types of mortgages.
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The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.