Equity release schemes are more commonly & individually known as lifetime mortgages, home reversion or home income schemes. These schemes are the perfect solution to purchase a new car, get funds for a new home improvement project, to pay for a holiday or to simply make your everyday life more comfortable.
Equity release schemes enable you to release money against the overall value of your home. The debt is then repaid from the sale of your property after your death, moving into long term care or earlier sale of the property.
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How do equity release schemes work?
While there are different schemes that offer a lump sum or/and regular income, they work on two principle’s.
The lifetime mortgage schemes provide you a with a capital amount from the value of your home with the amount to be repaid being determined by the interest rate charged & how long the interest roll’s up over.
Home reversion schemes still provide you with a capital amount, however the reversion company takes a percentage of the value of the property in return. Therefore, there is no interest element. Once the property is finally sold on death or long term care, the original percentage sold is retained by the reversion company & the beneficiaries receive the remainder. e.g. if 50% of the property was initially transferred to the home reversion provider, then on the eventual sale of the property there would still be 50% of this value to pass to the beneficiaries.
The minimum age for lifetime mortgages is only 55, whilst the minimum age for a home reversion scheme is 65. The property should must be owned & be in a reasonable condition. If a mortgage exists before inception, then this needs to be repaid from the equity release proceeds or any savings held. The equity release scheme, whether lifetime mortgage or home reversion scheme can be the only secured loan on the property.
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The attractive features of an equity release plan
Equity release plans can offer you a regular income, a lump sum amount or both with the money released being free of income tax. However, if the amount is invested & you are a taxpayer, you may need to pay tax on any interest gained.
In order to unlock equity, there is no need to sell or move your home. Using an equity release scheme, you get assurance that you can continue to reside in your home until you die.
If you do not have any family or children to leave your inheritance to, then an equity release scheme can be an extremely attractive concept.
With the above advantages that equity release schemes offer, it could be the perfect way to unlock your money & enoy a comfortable retirement.
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If yu have any questions on the topics discussed above then please contact the Equity Release Team on 0800 783 9652.
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Tags: equity release, equity release schemes, home reversion, home reversion schemes, lifetime mortgages, Roll up lifetime mortgage
