Equity Release

Find out more about the different equity release plans available to homeowners aged 55 and over.

With Lifetime mortgages, a mortgage is secured against your home, which can provide you with an income, a lump sum or a combination of both. There is no need for you to pay any interest on the loan, although some homeowners choose to do so. Instead, the interest is accrued and paid off only when the property is sold – usually when you and your partner have passed away or entered long-term care.

A Lifetime Mortgage with a drawdown facility allows you to take the cash in stages. This can be useful as it gives flexibility and the reassurance that you can access further funds at some point in the future should you need them. Interest is also only charged on funds when they are drawn down.

A Home reversion scheme lets you sell part or all of your home in return for a tax-free lump sum or a regular income and is normally available to homeowners aged 65 and over.

You will normally receive a below-market value for your property, as you retain the right to stay in your home rent-free until you die or move out permanently.

When this happens, your home will be sold and you or your estate will receive the value of your share. The value you receive will be the amount your home sold for, minus the share you sold to the equity release provider.

This means you’ll know exactly what percentage of your home’s value will be left to your estate on your death.

Equity release isn’t the right solution for everyone, and you are legally obliged to get professional advice. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so your children and dependents should be involved in this decision from the outset.

These products are usually seen as last resort and they are expensive, inflexible and may affect your entitlements to means tested benefits.

Think carefully before securing other debts against your home. Equity released from your home will be secured against it.