Do You Want To Know More About Equity Release?

Posted by Compare My Equity Release on November 26th, 2019

Equity Release refers to a range of products which enable you to access tax-free money tied up to your home if you are above the age of 55. You can take the money either in the form of smaller amounts when required or a lump sum amount or a combination of both.

Options of Equity Release

Lifetime Mortgage

A lifetime mortgage is the most common form of equity release.

Whilst retaining full home ownership for your lifetime, you can take out a lifetime mortgage secured on your home property or an investment rental property. You have an opportunity to either roll the interest up or choose to make repayments. When you (or the last survivor in joint cases) move into long-term care or you pass away, the loan amount as well as anyaccrued interest is repaid and the balance remaining goes to your estate or pays for your care. You are still able to move home and move the plan to another property.

Interest rates are currently the lowest in history on lifetime mortgages due to funding confidence and high demand due to many interest-only mortgages maturing with potentially no repayment strategy in place. Lifetime mortgages offer a tax-free cash injection in retirement for any purpose, including dream holidays and home improvements.

Increasingly, people are also using equity release to gift an early inheritance to family members for house deposits or any other purpose, and to enjoy the benefit of this whilst they are still alive.

While considering a Lifetime Mortgage, it’s useful to keep these below factors in mind which are stated below:

• The minimum age to take out a lifetime mortgage is 55. The interest can be added and ‘rolled up’ or paid on a voluntary basis.

• Because no mandatory payments are required with a lifetime mortgage, they are safer than typical mortgages as there is no risk of default, providing guaranteed home ownership for life.

• The Equity Release Council provides further consumer protection and codes of conduct for the lenders to follow, including a no-negative equity guarantee.

• The percentage you can borrow typically depends on your age factor and the value of your home. The percentage increases as your age increases.

• The Equity Release Interest Rates Compare can be fixed for your lifetime or variable. If they are variable, there is an upper limit which is fixed for the life of the loan.

• Lifetime mortgages are flexible.  You have the authority to move to another property subject to the new property being acceptable to the product provider as continuing security for the equity release loan.

Home Reversion

The least common option due to the flexibility now offered from lifetime mortgages, this method allows you to sell the whole home or a part of it to a home retention provider. In return you will receive an amount which you can get either in regular intervals or in a lumpsum amount. You will get an approximate market value of Equity Release Rates Compare of 20% to 60% of your home.