Home Equity Release Schemes
What are home equity release schemes?
Home equity release schemes is a collective description used occasionally to describe all types of equity release schemes designed to allow homeowners aged 55+ to release either a lump sum or income from their home without needing to sell the home.
If you are under 55 we may still be able to help you raise money from you home with an ordinary mortgage or re-mortgage. If you would like to discuss ordinary mortgages please complete our online enquiry form and indicate that you are interested in ordinary mortgages and we will call you back.
The range of home equity release schemes
Home equity release schemes include all of the following;
More information about each can be obtained by clicking on the schemes listed above.
Home equity release schemes-Benefits
Home equity release schemes were designed to help "asset rich but income poor" homeowners realise more income from their property to improve their retirement. However over the years they have continued to be developed and most home equity release schemes now allow you to choose whether to take a single lump sum, a facility to drawdown over a period of time when required, or income.
You can choose what to spend any money on; paying off debts, improving your home, helping family or simply enjoying your retirement the choice is yours.
Home equity release schemes-Drawbacks
Anyone considering a home equity release scheme needs to realise that all home equity release schemes 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. It will also reduce the amount of equity you can leave to beneficiaries.
Home equity release schemes and tax
The money realised by any home equity release scheme is currently free of both Capital Gains Tax and Income Tax. However if the money is deposited or invested depending on your tax status and how it is invested, any interest or investment return may be taxed.
Likewise for anyone liable to pay Inheritance Tax, any loan plus interest accumulated under a lifetime mortgage, or percentage of property sold under a home reversion plan can help minimise the amount of tax due or even reduce your estate to below any Inheritance Tax threshold applying at time of death. However due to amount of interest rolled up under a lifetime mortgage or share in property lost under a home reversion plan, we would not recommend that a home equity release scheme is taken out simply for inheritance tax reasons.
Please note: Rules on tax are liable to change.
Deciding whether home equity release schemes are right for you.
All forms of home equity release schemes involve borrowing against, or selling all or part of your home and are normally only paid off when you or the last applicant dies or move permanently into care. As such they are long term contracts and it is vital therefore that you fully understand how any home equity release scheme works before deciding to enter into one.
Receiving advice on home equity release schemes
If you are considering taking out an equity release plan, we would like to offer you the chance of having a free no obligation home consultation to fully explore all your alternatives and help you evaluate whether equity release would be right for you. If you would like to make an appointment, please fill in our our online enquiry form and we will call you to discuss your requirements or call us on FREEPHONE 0800 970 4883.
"Equity release" includes home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration.