Equity Release

Equity Release is a way of using the value in your home to release extra cash as a capital boost of income. Equity is the excess of a home's value over any loans or mortgage secured on it, so for a home without any mortgage the equity will be the total value of the property.

The two most common types of equity release are lifetime mortgages and home reversions plans, both of which allow you to safely release the equity from your home which you can use for any purpose. Although there are many different types of schemes they all offer you the chance to release equity, remain in your home and you won't have to pay it back in your lifetime.

Should I Release the Equity from my Home?

Equity release is perfect for someone who can release a higher percentage value of their home; this may be someone of retirement age who is considering releasing the equity in their property because they need cash for a particular purpose.

With Equity Release you can do just that, and you can use the extra income as you wish, such as making home improvements, buying a new car or improving your general standard of living.

Am I Eligible for Equity Release?

If you think that equity release is something that would suit your needs it is important to find out if you are eligible. The best way to do this is to get in touch with our expert advisors, they will be able to go through the options and find a scheme suitable for you.

Criteria used for equity release includes:

• Property must have a minimum value of £40,000.
• Youngest applicant must be over 55.
• You must be a resident of England, Scotland, Wales or Northern Ireland.
• Your home must be suitable for equity release plan as they do not include mobile homes or houseboats.

Equity Release Mortgages

An Equity Release Mortgage is otherwise known as a 'Home Equity Plan' or 'Lifetime Mortgage', and allows homeowners to release equity from their home without having to make any extra repayments.

The loan is secured against the property and provides the client with a tax free lump sum of cash or regular monthly instalments. The interest is added throughout the term of the loan, you will not have to pay anything back in your lifetime, and you can also move house if you wish.

Typically between 18-50% of your home's value can be released with an Equity Release Mortgage, but this is dependant on various factors such as your age.

Drawdown Plans

A Drawdown Plan works in a similar way to a lifetime mortgage but offers added flexibility. You decide how much money you want to release and then you can 'drawdown' the cash when you want it.

The interest will only be added when the funds have been withdrawn, meaning that if you release the cash more slowly then the interest will have less time to build up.

This is perfect if you are looking to have more control over your money, as you choose to make withdrawals when you need them, you also only pay interest on the amount of equity that you release and when.

Home Reversion

A Home Reversion Plan allows you to sell all or part of your home to release a lump sum of cash or monthly instalments, with a guaranteed lifetime lease of your home. You will often have to make no monthly payments or very low amounts of no more than £10 a year on average.

However, it is unlikely that you will get the full market price of your home, and the price will be based on factors such as your personal health. You will be able to stay in your home for as long as you wish, which may be until you die or leave the property due to ill health. If your partner is still living in the home, then your right to live in there is passed onto them.

Home Reversion plans are most suited to those clients who are 65 years or over. However younger ages can be considered for health reasons. The amount that you receive for the property will be dependant on various factors, including your age, property value and location.