Equity release is the process by which homeowners can withdraw tax-free cash from the bricks and mortar of their own home. Equity release is a generic term for any age-group and acts purely as a mechanism by which one can withdraw equity built up within their property to help supplement their lifestyle.
Recently, the term ‘equity release’ has been attributable to the over 55 age group, whereby homeowners have released equity. More specifically these 55+ equity release schemes actually fall into either category of a lifetime mortgage or home reversion plan. Lifetime Mortgages now account for the majority of the equity release market, providing 100% home-ownership and various product formats providing flexibility and lifestyle options for people at, or in-retirement.
The youngest age for any lifetime mortgage is 55. Based on average life expectancy, this represents a potentially long duration for any roll-up equity release plan to run. Where the maximum release of equity is taken & no repayments made, the homeowner is at risk of there being NO equity remaining for their beneficiaries. Preventative measure are available, such as making interest only or voluntary payments, which both help control the future mortgage balance.
Therefore, delaying the uptake of lifetime mortgages until absolutely necessary maybe more prudent. This will reduce the amount of future interest roll-up, resulting in less interest being charged & lowering of the final balance which ultimately needs repaying to the lender on death or long term care. An Equity Release Supermarket adviser will always help you decide when the best time take out an equity release scheme is, by considering the many alternatives first.