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Types of Equity Release Schemes
There are three different types of specialist Equity Release Schemes which allow you to make no monthly repayments:
Under these schemes you keep full ownership of your property but you obtain a secured loan (mortgage) against your property the benefit of which is paid as either a lump sum or monthly income (or both). The mortgage is not required to be fully repaid during your or the last survivors lifetime, and a number of these schemes require no monthly repayments.
Find out more about Lifetime Mortgages.
This type of scheme allows you to sell part or all of your property to a provider in return for either a lump sum or income and a lifetime right to remain living in your property. You can sell up to 100 per cent of the value of your property, but you will only receive a heavily discounted sum of money which could be as low as 25% per cent of the current market value at age 65% rising to typically 60% at 91 years of age.
The provider discounts the amount of cash as compensation for the fact that they may have to wait many years before receiving their money back on your (or in the case of joint applications, the last persons) death or need to move into care. When the house is eventually sold, the lender receives his percentage of the sale price, not just the market price at the time the arrangement was agreed.
Find out more about Home Reversion Schemes.
With this form of Lifetime Mortgage you mortgage a percentage of your property to a provider who in return gives you an annuity (a regular income for the rest of your life based on your age and sex). Unlike a reversion scheme you automatically have the interest on the loan deducted from the annuity payments each month. This way the loan doesn't increase like a Lifetime Roll Up Mortgage.
Find out more about Home Income Plans.
It is also possible to release equity and to pay monthly payments to save the debt from building up by means of an:
There are a few Building Societies and Banks that are prepared to offer ordinary Interest Only Mortgages for life to retired people, to allow them to release capital. These offer the advantage that the debt will not build up and therefore maintains the maximum equity in your property but has the disadvantage that monthly repayments are required. To enquire about this type of equity release, please complete our ordinary mortgage enquiry form and one of our consultants will call you back.
Your home may be repossessed if you do not keep up repayments on your mortgage.
For arranging ordinary mortgages we can be paid by commission, or a fee of usually £750 or a combination of both.
All equity release products involve borrowing against, or selling all or part of your home, and may work out more expensive in the long term than downsizing to a smaller property, and may affect your entitlement to State benefits and grants. There may be more suitable methods of raising the funds you need and we would suggest you investigate these first.
Find out more about some of the alternatives to Equity Release and Lifetime Mortgage schemes.
This advert refers to home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration
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