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Did You Know? Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 tax-free cash.
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Last updated 06 June 2020
Our Most Commonly Asked Questions
When comparing the voluntary repayment market, a specialist adviser will explain:
- You have to get advice before releasing equity.
- Check for plans that have a no negative equity guarantee, so you’ll never owe more than your home’s value.
- It reduces the value of your estate.
- The initial consultation is free with no obligation.
- The most popular form of equity release is a lifetime mortgage, which is a loan secured against your home. Note that you will still own your home.
Voluntary repayment is a way of releasing the wealth (cash) tied up in your property without the need to move.
With equity release products, if you are over the age of 55, you can either borrow against the value of your home or sell all or part of it for a regular monthly income, a lump sum, or the facility to get at equity as and when you like or a combination of these options.
Use our free voluntary repayment loan calculator to see how much you can release now.
Lifetime Mortgage LoanYou release a lump sum from the value of your property, by taking out a mortgage secured on your property (provided it is your main residence) whilst maintaining 100% ownership of your home. This amount, plus any interest accrued, (you can choose to make repayments) is repaid from the sale of your property when you pass away or move into long-term care.
Drawdown Lifetime MortgageThis works similar to Lifetime Mortgage3 but with a regular cash reserve/draw down option allowing you to withdraw amounts at a frequency you choose up to a specified amount of years, or until the cash reserve has been used up.
Interest-Only Lifetime MortgageYou get a lump sum and pay a monthly interest on the loan, which can be fixed or variable, rather than allowing the interest to roll up4 . The amount you originally borrowed is normally repaid when your home is eventually sold.
Home Reversion PlanHere, 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 free, 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. Not Looking For Equity Release?
Common Equity Release Uses:
- To supplement your pension income to cover living 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 debt5 and lower your monthly outgoings.
Voluntary repayment plans are not right for everyone and it is important 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 an equity release product, you choose one that meets your needs.
Remember that taking a voluntary repayment 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 choose the plan that is right for you.
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