Equity Release Mortgages
If you are 60 years of age or older you might have paid off your mortgage, or be close to doing so. The value of your home may have risen a lot since you bought it, but you might still be short of money to spend or invest in other ways. Equity Release is the term used to describe the different ways in which you can benefit from the value of your home to give you that extra choice without having to move out.
You can either take out a loan secured on your home or sell part or all of it to give you a regular income and/or a lump sum. There are two main types of scheme as follows:
Lifetime Mortgages
With a Lifetime mortgage you take out a loan secured on your home. This mortgage may be:
- A Home Income Plan - the lump sum is used to buy an annuity which gives you a monthly income, usually a fixed amount for life.
- An Interest Only Mortgage - you receive a cash lump sum and pay interest on the loan each month.
- A Roll-up Mortgage (rolled up means interest is added to the loan, for example each year) - you receive a regular income and/or a cash lump sum.
The mortgage is repaid from the proceeds of the sale of your home when you die, or if you move out of it (perhaps into a care home when the scheme will usually end and your home will be sold).
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
Home Reversions
With Home Reversions you sell all or part of your home to a third party, normally a reversion company or an individual. In return you receive a regular income and/or a cash lump sum and you continue to live in your home for as long as you wish. Once the scheme has started, the buyer of part, or all, of your home, benefits from any rise in its value. You or your beneficiaries benefit from any rise in the value of any part you have kept.
Equity Release Schemes can be helpful in certain circumstances but are not suitable for everyone.
This is a Home Reversion Plan, you should ask for a personalised illustration to understand its features and risks.
For further information please call 01603 218000 or use our Mortgage Enquiry form. Whilst we are not in a position to advise on equity release mortgages, we can introduce you to specialists who can. There is charge for mortgage advice, and this fee will depend on who we refer you to. A typical fee is 1½% of the amount being borrowed.
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