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Home » Services » Specialist Services » Equity Release » What is Equity Release?

What is Equity Release?

Ciarán Power

Last Updated: February 2nd, 2024 at 6:42 pm

Table Of Contents

Introduction

Equity release is a financial option for homeowners, typically over the age of 55, to access the equity (or cash value) tied up in their homes. This guide will explain the concept of equity release, how it works, and who it’s suitable for.

Understanding Equity Release

Equity release schemes allow you to borrow against the value of your home while continuing to live in it. There are two main types: Lifetime Mortgages and Home Reversion Plans. These options enable older homeowners to supplement their retirement income, fund home improvements, or meet other financial needs without having to sell their home.

Lifetime Mortgages

With a Lifetime Mortgage, you take out a loan secured on your property. You retain ownership of your home and can choose either to make regular interest payments or let the interest roll up. The loan and any accrued interest are usually repaid from the sale of your home when you pass away or enter long-term care.

Home Reversion Plans

Home Reversion involves selling a part or all of your property to a reversion company in return for a lump sum or regular payments. You have the right to continue living in the property rent-free until you pass away or move into long-term care, under the terms of the agreement.

Summary

Equity release offers a means for older homeowners to unlock the financial value of their property without the need to relocate. It’s a decision that requires careful consideration due to its impact on estate value, inheritance, and long-term financial planning. It’s advisable to seek independent financial advice and discuss with family members before opting for an equity release scheme.

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