Equity release is a concept which is often misunderstood. It is a common myth that you lose your property if you opt for this scheme. This is not the case.
Equity release is the equity tied up in your property that you can now release. This facility lets you still enjoy the ownership rights by mortgaging your assets. Equity release schemes give you 100% ownership of your property till you die.
What are the different types of equity release?
There are two types of equity release schemes:
- Lifetime mortgage: A lifetime mortgage scheme lets you retain complete ownership of your assets. An individual who takes the loan has no responsible any monthly payments. The loan is eventually repaid by the legal heirs after the holder moves into care or eventually dies. Hence, the reason why this is known as a lifetime mortgage scheme.
- Home Reversion scheme: You need to sell part or all of your property to the reversion provider for this scheme to work.
There are three reasons how the size of the release can be affected: -
- The greater the percentage of the property sold, the greater the size of the release
- The older the equity release applicant, the higher the amount that can be raised
- If their is an element of ill-health, then the home reversion provider can release a larger than normal cash lump sum
Types of payment
There are two types of method of receipt of the cash payment you get in an equity release scheme; a lump sum and a monthly income payment. You can opt for one of these payments dependent on your needs.
A lump sum amount can be used for capital expenditures, while monthly payments can be chosen by those who need a regular income in retirement.
The most important benefit of equity release is that it gives you tax-free money. The only thing you need to remember is that you can mortgage the property which you own.
The minimum age to be eligible for these schemes is 55 years for a lifetime mortgage and 65 for the reversion scheme.
To obtain advice on which is the right equity release scheme for you please ring the Equity Release Supermarket team on 0800 678 5159 or email [email protected].