What is Equity Release?
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The value of your home, less any mortgage is known as ‘equity’. Equity Release is the name given to a range of financial products that convert a proportion of that equity into cash for your own use.
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Equity Release Plans usually have the following common factors:
What is Equity Release
Equity release comes in two main forms, Lifetime Mortgages and Home Reversion Plans
Lifetime Mortgage
A lifetime mortgage is a form of equity release that allows you to borrow money against the value of your home. This is usually done as a lump sum or as a series of smaller payments (often called a ‘drawdown’ scheme), with interest accruing on the amount borrowed. The loan and interest are repaid when you die, sell your property, or move into long-term care.
Lifetime mortgages are the most popular product taken when people talk about equity release
Home Reversion Plan
Home reversion plans are another form of equity release that involves selling a portion or all of your home to a provider in exchange for a lump sum or regular payments. This allows you to access cash without having to move out of your home, as you can continue to live in it rent-free until you die or move out.
To be eligible for a home reversion plan, you must be at least 65 years old and own a property worth at least £70,000. The amount you can receive for the share of your property you sell depends on your age, the value of your property, and your health.
The Mortgage and Protection Advice Centre Ltd do not advise on Home Reversion Plans. If you wish to find out more about these plans, we will refer you to a third-party specialist.
• Equity Release has a minimum age of 55.
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• You receive a guaranteed tax-free cash sum or income for life.
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• You continue to live in your home for as long as you wish.
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• There are no repayments required until your home is sold. This is normally after your death or entering long term care.
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• You have the freedom to move to a suitable property should you wish to do so in the future and transfer your equity release plan to your new home subject to the lenders property criteria.
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• Your estate will not be liable for any debt beyond the property value
regardless of future house prices.
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This is a Lifetime Mortgage. These are only applicable to those 55 and over, and it could affect eligibility to state means-tested benefits and the inheritance you may leave. To understand the features and risks, ask for a personalised illustration.
