equity release explained

Is it right for me?

Equity release earned a bad reputation in the 80’s when thousands of homeowners fell into negative equity. The market was poorly regulated and interest rates shot up.

More recently, equity release has become popular again. Where house prices have increased significantly over the past decade, homeowners have more equity to play with, making this option less risky. On top of this, there is far more information and support available today to help people make the right decision for their circumstances. 

What is equity release?

Simply put, equity release is a way of accessing some of the value of your home and turning it in to cash. There are two main types of equity release products – lifetime mortgages and home reversion plans.

Lifetime mortgages

A lifetime mortgage does what it says on the tin: it’s a long-term loan secured against your home which is repaid when you pass away or go into care. Though it seems daunting to have no repayments and allow the interest to increase overtime, the benefit of course, is accessing money now that you can use for whatever you like!

Home reversion plans

A home reversion plan involves selling all or part of your property to your provider in exchange for a lumpsum or regular income. Now this does mean not fully owning the property, however you stay living in the property paying no rent.

What can I use the funds for?

Equity release funds can be used for anything: to help you pay off debt, renovate, spend on a holiday, gift, whatever you like.

Equity release criteria

·       You need to be over the age of 55. For joint cases it will be based on the age of the youngest applicant.

·       You must be a UK resident and the property needs to be in the UK.

·       The house must be valued over £70,000.

If your expenses outweigh your income or you want a bit of cash to enjoy and go on that much needed holiday in 2021, we would be happy to have a discovery chat to help you learn more about equity release.