Advice on equity release schemes from The equityRelease Centre

Equity Release schemes help homeowners over 55 (or in the case of joint applicants, both are over 55), release some of the capital tied up in their home without the need to take out a traditional mortgage or move. Equity release schemes allow you to choose how much equity to release dependent upon your age and property value.

There are two different types of Equity Release Schemes:

• Lifetime Mortgages (formerly referred to as roll up or cash release schemes)
• Home Reversion Plans

Lifetime mortgages can either take the form of:

• Lifetime Roll Up Mortgages (where no monthly repayments are required)
• Interest Only Mortgages (where monthly repayments are required)
• or Home Income Plans

Lifetime Mortgages

Under these schemes you keep full ownership of your property but you obtain a secured loan 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. To find out more about Lifetime Mortgages click here.

Interest Only Mortgages

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. Interest Only Mortgages mean that you only repay the interest not the capital to the lender, therefore, the monthly repayments can be relatively affordable. To find out more about Interest Only Mortgages click here.

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

Home Income Plans

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. To find out more about Home Income Plans click here.

Home Reversion Plans

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. To find out more about Home Reversion Plans click here.

All 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. There may be more suitable methods of raising the funds you need.

With such variations and options together with an increasing number of equity release schemes to choose from, it pays to receive independent advice.

So if you would like to receive friendly impartial advice on whether an equity release scheme is suitable foryou, then please contact us by emailing The equityRelease Centre, completing our equity release enquiry form, phoning 0118 958 8810.

This advert refers to home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration.