Equity release refers to a secured mortgage arrangement for retired homeowners in the UK. It allows older people to unlock the equity from their property and use it for any purpose they want. With equity release schemes, the retired homeowners can release the equity they have accumulated in their property for years.
Who can apply for equity release?
When it comes to equity release schemes, there are few rules in regards to who can opt for them. The older you are, the more equity can be released from your home. In order to qualify for an equity release loan, there are some important criteria you need to fulfil. You should:
- Be aged 55 – 95 years
- Possess your own home
- Own a property costing £60,000 or more
- Have no or little mortgage
- Have a leasehold or freehold property with a minimum lease period of 75 years
The arrangement of equity release is usually set up by a qualified lending institution. The money can be received as lump sum, a monthly instalment or a combination of both. The best part of equity release is the fact that it allows homeowners to live in their property for a lifetime. After the property owner passes away, the property is sold and the lending institution regains its money.
Depending on the seller’s financial position, the buyer can take equity as a monthly payment or a lump sum. Unlike other mortgage loans, the cash unlocked from equity release is completely tax free. This allows the borrowers to spend the money in any way they want.
So, if you are looking to generate additional income post retirement, opt for equity release.