Equity release schemes are a method by which home owners can acquire tax-free income from their property. This process ensures a financially stable future. These schemes let you be in charge of the equity which has built up in your house. Equity is the remaining worth of your property after the mortgage has been paid off.
If you are a homeowner nearing 60, equity release schemes can give you a tax free lump sum or a regular income. You can spend this money on whatever you wish.
There are two main schemes, namely lifetime mortgages and home reversion plans.
Lifetime mortgages – how do they work?
You have access to an amount of money calculated by the value of your house. The money comes to you as a lump sum, as regular income or as a combination. You continue to own and live in your house and while interest is levied, it is added to the value of the loan so that the actual loan amount rises over time. The loan and the interest charges are paid back when the house is sold.