Lifetime Mortgage: The most common form of equity release, where you take out a loan secured against your home, but you don’t need to make regular repayments. The interest is typically added to the loan, which is repaid when you pass away or move into long-term care.
Home Reversion Plan: In this less common option, you sell a portion or all of your home to a provider in exchange for a lump sum or regular payments. You can continue to live in the property until you pass away or move into care.
Release of Funds: The funds from the equity release can be used for various purposes, such as supplementing retirement income, making home improvements, covering healthcare expenses, or helping family members financially.
Interest Accumulation: With a lifetime mortgage, interest accumulates over time and is typically repaid when the property is sold, usually upon the homeowner’s death or move to long-term care. The final amount repaid includes the initial sum borrowed and the accrued interest.
Impact on Inheritance: It’s essential to consider that equity release mortgages can reduce the value of your estate and the inheritance you leave to your beneficiaries.
Equity release can be a way for older homeowners to unlock the value in their property to enhance their retirement lifestyle or meet specific financial needs.
However, it’s a complex financial product with various factors to consider, including interest rates, potential impacts on state benefits, and legal and financial advice.
It’s highly recommended that individuals seeking equity release obtain professional advice to make informed decisions.