What is equity release?

Equity release products allow you to draw a lump sum or a regular income using some of the value you have built up in your home. You can live in your home for the rest of your life or, move if you choose. There are two main types of equity release scheme available on the market:

Home Reversion Plans

You sell part or all of the financial interest in your home. The amount you receive will be less than the current market value and will be dependent on your age and gender. Although you will no longer own your home, you will have the right to live there for the rest of your life or until you move into long-term care.

You know what proportion of your property has been sold and you can determine what proportion you have left to raise further money on, or to leave as an inheritance.

When you die the house is sold and the home reversion provider receives the sales proceeds for the share you have sold. You can cancel but it is likely you will have to pay the full market value for the share you wish to repurchase.

Lifetime Mortgages

This is a loan secured on your property, just like an ordinary mortgage. However, you do not normally make repayments in your lifetime. Instead the lifetime mortgage provider is normally repaid when you die or move into long-term care, and the house is sold.

With most lifetime mortgages you cannot guarantee an inheritance, as the amount of interest payable increases as long as you live. You can cancel by repaying the loan, but some schemes may have early repayment penalties.

How is the Property Plan different?

The Property Plan is a type of home reversion plan but it has some important differences from typical home reversion plans

Back to top