What is Equity Release?

Your Equity is the difference between the amount left to pay on any mortgage or loan secured against your home and the value of your property. If you have owned your home for some time you may have seen the value of the property increase in value over the years and so the value of the equity in your home will have grown.

Equity Release is a way for homeowners aged 55 and over to use this equity to help with their needs. The money you release is tax free. Typically there are no monthly repayments to make and your Equity Release plan is usually repaid when you pass away or enter long term care.

The most popular type of Equity Release is a Lifetime Mortgage. A Lifetime Mortgage is a long term mortgage secured against your property. You can make regular repayments or the interest is rolled up until the plan is repaid.

Less common are Home Reversion plans. These are not loans, meaning there is no interest to pay. Instead the homeowner receives a cash lump sum for selling all, or part of their home to the Equity Release provider. With both types , the person taking out the Equity Release retains the right to live in their home. And with both types, the property is usually sold after the last living applicant on the plan dies or moves into permanent long term care.

If you’ve found this video helpful, why not have a look on our website – RetirementSolutions.co.uk, where you’ll find lots more videos giving information about Equity Release.