Working with equity release schemes might sound complicated at first, but that’s most likely because you need to get the right information. When you’re a homeowner, it’s not like there aren’t many schemes being offered to you. However, many of them require a lot of fees and often hide these fees from you. Equity release schemes are different.
For starters, the goal of the equity release scheme is to keep you in your house for the long term. You don’t have to give up your home just to get extra money to make your life comfortable. You can have your choice of a lump sum (in the case of a lifetime mortgage), or monthly payments. It’s completely up to you.
There are a few different categories to consider when it comes to equity release schemes. Most of them do become available to you from age 55 and onward.
The most common that you’ll hear about is the lifetime mortgage, which gives you a lump sum of cash to use any way you like. Keep in mind that the money is tax free, and there are no limits on how you spend it. In addition, you own your home still and you also benefit from increases in value.
The money you have released is repaid from the proceeds of the property once it’s sold off — usually in the event of your passing, or if you move into a long term care facility.
If you don’t want to have the money all at once, you might want to look at the drawdown lifetime mortgage. This is a scheme that gives you a lot of extra flexibility, since you can have your cash released over time. Why is this so important? You only accrue interest on the funds that are taken, which brings down the amount you pay over time — as compared to a lump sum.
There’s also the interest-only lifetime mortgage, which lets you make regular payments — thus bringing down the amount you owe as well.
The final scheme is the home reversion plan, which is where you sell some or all of your property in exchange for a lump sum. You still have the right to remain living in your home, rent free, for the rest of your life.
As you can see, there are a lot of different options. Finding the right option for you might take a little bit of research, but it is definitely always worth it — check it out today for yourself!
