Equity Loan Release

Equity Loan Release

Equity loan release is a financial solution used by individuals to generate cash from the value of their property. Equity loan release is specialised for mature individuals seeking extra income for personal or financial reasons and can only be sought by individuals aged 55 or over. Our expert advisers are able to select an appropriate form of equity loan release for are clients, depending on their aspirations and their current financial situation.

The arrangement enables borrowers to receive either a lump sum of cash from the equity loan release provider, which can be spent at will, or in the form of annuity (a regular income for life).  In return, the borrower pays the equity loan release provider the full mortgage by the end of the arrangement. Alternatively, the equity loan release provider is entitled to shares in the borrower’s property. The arrangement ends when the borrower of the equity loan release plan dies, or occupies residence in a care home indefinitely.

An equity loan release, which enables the borrower to pay back the mortgage at the end of the arrangement, is known as a lifetime equity loan release product. A lifetime equity loan release can either be in the form of an interest only arrangement, rollover arrangement or a home income plan.

Interest only lifetime mortgages allow the borrower to pay the mortgage in full at the end of the arrangement. However, the provider must receive monthly payments of interest rates from the borrower. Rollover arrangements do not require monthly payments of interest; instead the interest is calculated monthly throughout the term of the arrangement and added to the mortgage debt. Home insurance plans enable the borrower to use the generated cash to buy an annuity, supplying the borrower with an income until death. This income is used to pay off the debt and interest monthly.

Lifetime mortgage equity loan release arrangements may be beneficial for individuals as the borrower retains full ownership of their property. There may also be equity left in the property after the death of the borrower, allowing the children or beneficiaries of the borrower to benefit. However, variable interest rates can reduce the amount of equity left in the estate after the end of arrangement. In addition, younger borrowers may be at a disadvantage as their increased life expectancy indicates years of rolled up interest adding to the sum of the debt. Our advisors are available for potential clients to seek help on which form of lifetime mortgage equity release is best suited to their plans.

Home reversion equity loan release schemes differ from lifetime mortgage equity loan release schemes. Instead of paying the mortgage back at the end of the arrangement, the plan holder agrees to sacrifice shares in their property. In exchange, the borrower is promised guaranteed lifetime occupancy along with a cash sum, which may be used to buy an annuity. This annuity provides an income for the rest of the borrower’s life.

There are benefits to home reversion equity loan release plans. Borrowers will not have to make any monthly payments to the provider; inheritance tax will decrease for the borrower’s inheritors (only applicable with part home reversion equity loan release schemes) and the security of a home for life is promised.
In contrast to this, the borrower does not retain full ownership of their property and the property is sold after the death of the borrower, meaning the borrower or his inheritors can not invest in any future plans regarding the home.

If a mature individual is considering whether equity loan release is a realistic option, we may be of assistance in finding the perfect product for your individual needs and requests. It must be clear to the individual that other options other than equity release may serve more benefit. With our assistance, each client will have the ability to confidently decide on the most affordable and cost-effective equity loan release product, based on the client’s currently financial status and their intentions with the money received.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE.

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This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE.