Features of equity release plans
Lump sum
lifetime mortgage
A lifetime mortgage plan that allows you to release a tax-free lump sum from your main residence.
The amount of money you can borrow with a lump sum lifetime mortgage depends upon three things. They includes the age of the youngest homeowner, the value of your property being at least £70,000 and where you live in the UK.
What are the eligibility criteria for equity release?
To be eligible for a lifetime mortgage, which is the most popular type of equity release, you must own your own property, be aged over 55, and the property must be worth at least £70,000. If you are a couple, the youngest homeowner must be over 55. You also need to release at least £10,000 from the property.
Lifetime mortgage drawdown
You can release an initial tax-free amount, along with a pre-agreed reserve facility, up to a certain amount for a future release of tax-free cash when needed. The drawdown feature lets you take tax-cash from your home as and when you like – rather than in a single lump sum.
Ad hoc payments
You can make ad hoc payments to your equity release plan, usually, these are penalty-free, putting you in control as it’s your plan. Put simply, you will have the flexibility to choose if you want to make repayments.
Enhanced
lifetime mortgage
If you have health problems, you may be able to access a higher amount of tax-free cash as lending criteria is based on your personal health records. Your Retirement Solutions equity release adviser will be able to provide you with more information.
Downsizing protection
If you decide to move house, you may be able to pay back the lifetime mortgage without penalty. This exemption is offered by some lenders and the terms of downsizing protection vary from lender to lender.
Inheritance protection
For some people, leaving an inheritance is important. You can guarantee an inheritance for your loved ones by ring-fencing a proportion of your property value with a protected Lifetime Mortgage.
This allows you to guarantee that a percentage of the future value of your home will be left to your family when the property is sold, regardless of how much interest accrues.
Repayment waiver
This feature of a lifetime mortgage is designed for joint-life plans, providing a repayment window upon the first death, in case the penalty is waived by the lender, depending on the timescales of the plan.
Reversion plans
You can sell part or all of your home to release a tax-free lump sum. You’re granted a lease for the remainder of your life to live in the property. Whatever percentage you do not sell is guaranteed as part of your inheritance. The amount of tax-free cash you receive will be less than the value of the percentage of the property you have sold.
