Equity release is money you receive for your home without having to sell it. It is nothing but a value for your house which you receive in the form of tax free cash.
Equity release can be paid as one lump sum or on a more regular basis.
Cash which is received on a monthly basis is treated as regular income. This regular income can be used in a similar way in which you use your salary. This proves to be a beneficial option for retired people. They do not have to depend on anyone for their basic needs and can spend this extra income on leisure activities or by utilising a drawdown equity release scheme they can use it to provide additional payments in the future.
The lump sum payment allows a person to use it as they choose. This money can be used for investment purposes of which the main one is in a further property. This could be to buy a caravan or a second property for rental or holiday purposes. More commonly it is being used to assist children to get on the housing ladder by way of gifting them the deposit.
Financial security in old age
Equity release is a way to protect you financially in old age. A higher percentage of the value of your home is paid to older people. The equity release loan is paid only to the title owner of the property.