Equity Release Wise

It’s necessary to note that release is a way of releasing the wealth (cash) tied up in your property without the need to move. With release products, if you are over the age of 55, you can either borrow against the value of your home or sell all of it for a regular monthly income, a sum, or the facility to get at equity as and when you like or a combination of these options.

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or How Much Equity Can You Release?

Although there are many different plans available, they can all be split into four categories of release schemes.

Lifetime Mortgage

You release a lump from the value of your property, by taking out a debt secured on your property (provided it is your residence) whilst maintaining 100% ownership of your home. This amount, plus any interest accrued, (you can accept to make repayments) is repaid from the sale of your property when you pass away or move into long-term care.

Drawdown Lifetime Mortgage

his works similar to Lifetime debt but with a regular cash reserve/draw down option allowing you to withdraw amounts at a frequency you adopt up to a specified amount of years, or until the cash reserve has been used up.

Interest-Only Lifetime Mortgage

You get a lump and pay an interest on the loan, which can be fixed or variable, rather than allowing the interest to roll up. The amount you originally borrowed is normally repaid when your home is eventually sold.

Home Reversion Plan

Here, you sell some or all of your property to a home reversion provider in exchange for a lump sum of money or regular payments, whilst maintaining the right to remain living in your home, rent, for as long as you live, but you have to agree to maintain and insure it. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.

With a release scheme, you can use the money on almost anything you accept. There are many reasons for releasing from your home and here are just a few of them:

• To supplement your pension income to cover expenses
• To settle a repayment mortgage or clear the balance on an interest-only mortgage
• To improve your standard of living
• To see your family enjoy their inheritance while you’re still here
• To carry out some home improvements
• To take that holiday of a lifetime
• To help your children onto the property ladder
• To pay off other outstanding debt and lower your monthly outgoings.

See How Much Equity You Can Release

Note that release plans are not right for everyone and it is necessary that you fully consider your options and receive independent financial advice before making a decision. It is also important that, if you do decide to use a product, make sure you adopt one that meets your needs.

Remember that taking a plan is generally a long term option. However, there are flexible plans available that may fit your varying needs and some will allow you to repay in the future without any penalties.

A financial adviser can help you to select the plan that is right for you.