Equity Release Mortgages

Equity release mortgages- a description.

Equity release mortgages are equity release schemes which are designed to allow homeowners normally at least aged 55, to release some of the equity in their home to improve their financial position without moving or selling the rights to your home and giving you the right to remain living in your home for the rest of your life/lives.  Because these mortgages should allow you the right to remain living in your property for life, they have been termed lifetime mortgages by the Financial Services Authority.

There are a variety of equity release mortgages offering you a choice of receiving either a lump sum of money, a facility to draw from over a period of time or to receive an income.

Types of equity release mortgages.

 Equity release mortgages or lifetime mortgages may be either:

A roll-up lifetime mortgage - These have quickly become one of the more popular equity release mortgage schemes recently partly because with these schemes instead of paying interest each month, you allow the provider to  roll up  or compound their interest on the original amount borrowed so the debt gets bigger. The original loan plus accumulated interest is then only repaid when you finally sell the property.  With such schemes you can receive either a lump sum or a facility to drawdown over time in which case interest is only compounded based on the amount actually taken and not on the whole facility granted helping to save interest.  For further information on roll up lifetime mortgages click roll up lifetime mortgages.  For more information on drawdown lifetime mortgages click drawdown lifetime mortgages.

A fixed repayment lifetime mortgage. Here you receive a lump sum, but don't have to pay any interest nor does the interest roll up over time.  Instead, whenever the home is sold (whether it is in just 6 months or say 25 years), you or your beneficiaries have to pay back a fixed amount which is considerably higher than the amount than you received. The amount you need to pay back is agreed in advance.  For further information on fixed repayment lifetime mortgages click fixed repayment lifetime mortgages.

An ordinary interest-only mortgage which has no set repayment date.  Unlike a roll up lifetime mortgage, this type of lifetime mortgage requires you to pay monthly repayments of interest. This way the debt never grows and more equity is maintained in the property.  For further information on interest only lifetime mortgages click interest only lifetime mortgages.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Equity release mortgages-amounts available

The amount available under a interest only lifetime equity release mortgage will be determined by your income, but as these mortgages are designed to run for the rest of your life, lenders will use your post retirement income to assess the amount you can borrow, not any current income if you are still working.

The amount available under a roll up lifetime equity release mortgage is determined simply by the age of the youngest applicant (must be at least 55) and the value of your home.  To get an immediate indication of how much you could borrow, try our online equity release calculator.

Equity release mortgage advice

As there are a variety of equity release mortgages we would strongly recommend that anyone considering equity release should seek professional and impartial advice on equity release. If you would like to benefit from a free initial home consultation so that you can discuss your plans with our professional equity release adviser, simply complete our online enquiry form and we will call you back as soon as possible to discuss a suitable appointment.  Alternatively please call us on FREEPHONE 0800 970 4883.

We can assure you that your call will always be treated in the strictest confidence and be dealt with in a friendly, efficient manner at all times.

This is a lifetime mortgage.  To understand the features and risks, ask for a personalised illustration