Types of Equity Release (Oct 2021)

Your Go-To Guide on the Best Lifetime Mortgage Options on the Market

Have you considered the financial advantages of equity release? There are a number of types and options of equity release lifetime mortgages to suit your needs

Got a Question?

Need a Quick Answer?

* Get an expert to give you a quick call.

Types of Equity Release
Audio Thumbnail
Sound Bar

2 Types of Equity Release You Need to Know About

Don’t be put off by the many equity release options out there in Oct 2021!

Like many over 55s, you’re likely considering equity release as a way to give you a financially free retirement. With so many plans on the market, there are endless choices to consider. We’re sure that you’re asking: what are the equity release options?

By reading through this article, you can discover:

  • The 2 main types of equity release available in Oct 2021.
  • The options available within these plans.
  • Whether or not equity release will help you achieve financial freedom.

Let’s get started!

The 4 Major Benefits of Equity Release

2 Main Types of Equity Release in Oct 2021

A Lifetime Mortgage

The most common type of equity release is a lifetime mortgage, which involves taking out a loan against your home. Repayment of the loan only needs to be completed when you die or move into long-term care. Some financial providers give you loan repayment options if you would prefer to do so.

DISCOVER: A Comprehensive Guide to Lifetime Mortgages in the UK

A Home Reversion Scheme

The other fantastic option is a Home Reversion Scheme. In such cases, you will sell all (or some) of your property to the lender at less than the market value. In return, you get to stay in your home rent-free until you pass away or move into permanent care. In addition, you’ll receive a lump sum, smaller monthly income, or a combination of the 2.

Learn more about: Home Reversion Schemes

Why consider equity release? Let’s find out!

The 4 Major Benefits of Equity Release

  1. Your property remains yours, and you can continue to live in it throughout your life, or until you need to go into a long-term care home.
  2. You will get a lump sum of money to spend however you want, or a regular salary.
  3. If you would like the inheritance money for your family to be left untouched, you will have options to guarantee its safety. These will impact the amount you can borrow.
  4. You are protected by the Equity Release Council. This body regulates the industry, including stipulating a ‘no negative equity’ clause. This means that your family will never pay more for your home than the value of your home upon selling, even if property prices plummet.

There are many advantages and disadvantages of equity release in Oct 2021, and it’s important to be aware of them to get the best out of these financial products.

Are You Considering Equity Release?

4 Most Common Equity Release Types

So What Other Options Do You Have?

Knowledge is power, and this is no different when it comes to equity release. You need to know all your options to ensure that you aren’t missing out on what’s best for you. In addition, it’s best to speak to your financial adviser as they’ll be able to unpack all these different options.

Let’s unpack what these are!

1. Drawdown Plans

drawdown plan lifetime mortgage operates in a similar way to other lifetime mortgage plans. However, you are offered more freedom with a drawdown plan.

A drawdown plan gives you the flexibility and freedom to take out cash from your home when and as you like. After taking out your lump sum, the plan allows you to ‘draw down’ additional money in stages whenever you want. Many consider this a flexible option and it can significantly assist in planning your finances and financial future. You only need to pay interest on the amount you borrow and not the full reserve.

2. Enhanced Plans

An enhanced plan is an option for you or your partner to consider if you have any pre-existing health or lifestyle conditions, which will allow you to release more money from your home.

Heart problems, high blood pressure, and diabetes are typically the health conditions that qualify one for an enhanced equity release plan. By lifestyle choices, this may refer to things such as heavy smoking. It is crucial to pick an adviser who will advise you on this as you may miss out on thousands.

3. Protected Plans

A protected plan offers you the possibility to secure and guarantee an inheritance for your loved ones.

Let’s say a couple can release £50,000 but would like to leave an inheritance for their grandchildren. They could take £30,000 from that amount, leaving 40% of their property ‘protected’ for them.

An alternative to this would be releasing equity for an early inheritance.

Gain inspiration from the: 12 MOST COMMON Uses of Home Equity Release

4. Combined Plans

Combined plans give you the option to take out an equity release plan with your partner. This means that they will be able to continue to live in your home until they pass away or move into permanent care, even if you pass away first.

This could be of great comfort and definitely something to discuss with your financial adviser.

Numerous Financial Advisers and Lenders

The first thing you need to do is select your financial adviser. You’ll be working with this person for the rest of your life, so make sure it’s someone you trust.

After that, your financial adviser will help advise on the best lenders for your circumstances. It would be best if you met with a few lenders who offer different plans before settling on your final selection.

Top Tip: You MUST use a lender who is a member of the Equity Release Council!

Got Questions? Check These First

Is There More Than One Type of Equity Release?

What Is The Best Type of Equity Release?

Conclusion

Equity release is a financial product that allows you greater flexibility and freedom in the latter stages of your life. With so many options available to you in Oct 2021, it’s best to speak to your financial adviser. They’ll help you find all the best options available for you.

Want to know how much you could release? Try our release equity calculator.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

Contributors: Nicola Date, Katherine Read
Reviewed by Francis Hui

What people say

You are the best. You delivered what you mentioned you would that was much better than anybody else. I can not rate you highly enough!!
Brenden
Brenden
SovereignBoss client
I'd like to commend the excellent support we received from you guys in our recent equity release application, which proceeded faster than we could have hoped. Thank you so much.
Margaret
Margaret Doyle
SovereignBoss client
I have to say my experience with SovereignBoss was positive from start to finish. The level of customer service I received from John was simply outstanding, thank you!
janus
Janus Kern
SovereignBoss client

You may also like

  1. Portfolio Choice in Retirement – What is the Optimal Home Equity Release Product?
    2014 Social Science Research Network DOI: 10.2139/SSRN.2280883
    Katja Hanewald 1,Thomas Post 2,Michael Sherris 1
    1 University of New South Wales ,2 Maastricht University 12
  2. Overcoming obstacles to equity release
    2007 Housing, Care and Support Volume: 10, Issue: 1, pp 18-22 DOI: 10.1108/14608790200700004
    Rachel Terry ,Richard Gibson
    Joseph Rowntree Foundation 1
  3. The UK Equity Release Market: Views from the Regulatory Authorities, Product Providers and Advisors
    2020 Social Science Research Network DOI: 10.2139/SSRN.3714552
    Tripti Sharma 1,Declan French 2,Donal G. McKillop 2
    1 University College Cork ,2 Queen’s University 1
  4. Attitudes towards housing equity release strategies among older home owners: A European comparison
    2021 Journal of Housing and The Built Environment pp 1-20 DOI: 10.1007/S10901-021-09823-2
    Joris Hoekstra ,Kees Dol
    Delft University of Technology 12
  5. Financial Advice, Differentiated Consumers, and the Regulation of Equity-release Transactions
    2014 Journal of Law and Society Volume: 41, Issue: 3, pp 446-469 DOI: 10.1111/J.1467-6478.2014.00677.X
    Lorna Fox O’Mahony ,Louise Overton
    University of Essex 12345
  6. Mortgage-equity release: the potential of housing wealth for future Dutch retirees
    2013 Journal of Housing and The Built Environment Volume: 28, Issue: 2, pp 205-220 DOI: 10.1007/S10901-012-9301-X
    Janneke Toussaint
    Delft, The Netherlands 123
  7. Equity Release: Another Equitable in the Making
    2017 Studies in Applied Economics
    Dean Buckner ,Kevin Dowd 1
  8. Housing equity release, old-age income, and public finances 1
    2015 Social Science Research Network DOI: 10.2139/SSRN.2645640
    Niku Määttänen ,Tarmo Valkonen
    Research Institute of the Finnish Economy 1
  9. Equity release and taxation of life annuities
    2013 Research Papers in Economics
    Niku Määttänen ,Tarmo Valkonen 12
  10. The Future of the UK Equity Release Market: Consumer Insights and Stakeholder Perspectives
    2015
    L Fox O’Mahony ,L Overton 1
Have You Read Our Most Popular Equity Release Articles?

HOW MUCH EQUITY CAN YOU RELEASE?

Most people are using equity release as a means of retaining the use of their house while also obtaining a lump sum or a steady stream of income. Get matched with an expert and check your eligibility for equity release options.

Use our free equity release calculator & see how much you can release today.

Request a Call Back Below 👇

We’ll get an expert to call you back shortly.

Equity Release Call Back
Please check your details are 100% correct

We Hate Spam as Much as You. 100% Secure.

As Featured In
yahoofinance marketwatch

How Much Can You Release?

Use the FREE Calculator Below 👇

 

Equity Release Calculator

Value of Your Home?

50000

Drag me

100% Secure & Fast. Takes Just 8 Seconds.

As Featured In
yahoofinance marketwatch
rachel w

Written by
Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
john lawson profile.jpg

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
francis

Written by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Written by
Katherine Read
Financial Planning Reporter

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
nicola

Written by
Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

See How Much You Can Release 👇

Use the QUICK form below.

 

Equity Release Calculator

Value of Your Home?

50000

Drag me

100% Secure & Fast. Takes Just 8 Seconds.

As Featured In
yahoofinance marketwatch