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Lifetime Equity Release Schemes – Here Is Some Information You Ought To Know

By Mark Gregory on October 6th, 2010

If your pension falls short of your budgetary requirements, then an equity release scheme could certainly be a good solution. Equity release is specially designed for homeowners who are above 55 years of age and want to unlock money against the value of their homes. And, one of the best things about the money which you will get under equity release is that it is tax-free.

 

What is a lifetime mortgage equity release scheme?

Most homeowners opt for this scheme & it accounts for almost 90% of all equity release schemes undertaken. These equity release schemes allow them to borrow money against the value of their homes, retaining 100% ownership. The best thing about a lifetime mortgage scheme is that it does not demand monthly payments.

As there are no monthly payments, the interest is directly added to the original amount borrowed & it can either be added monthly or annually. Under lifetime equity release, the repayment is made after your death or on moving into long term care, by selling the property.

 
Additional features offered by lifetime mortgages

As you will receive the money on the basis of fixed interest, you are therefore completely protected from interest rate volatility. This means that, providing you don’t borrow additional funds, then you will know in advance the future balance of the equity release plan. Some newer equity release schemes will let you build an inheritance protection feature which will leave some value of your home or property for your beneficiaries.

 

Lifetime mortgages – Three different types

This equity release scheme is further categorised into three different types. The first one is a roll-up scheme which allows you to avoid any repayment, with the interest compounding over the years. Under a fixed repayment scheme, you only have to pay a pre-determined amount of money to the lender, thus protecting the inheritance to your beneficiaries. Lastly, interest-only lifetime mortgages allows you to pay the interest every month.Therefore, the balance will remain the same throughout the term of the mortgage. Such schemes as the Halifax Retirement Home Plan will meet this criteria.

 

Equity Release Supermarket are independent equity release specialists who can advise you on which scheme is best for your individual circumstances. Call the team now on 0800 678 5159.

 

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