Equity Release Information

Equity Release Information

Equity Release Information                      

Equity release information refers to information on the different schemes associated to equity release, which enable individuals over 55 to obtain a sum of money or income via the use of their property’s value. Equity release schemes may also guarantee the individual lifetime residency at the estate. In exchange, the borrower either administers a full mortgage repayment to the provider of the equity release, or consents to the provider’s ownership to a share in the property. We offer precise and detailed equity release information to all of our clients, as we are determined to find the best solution available for each and every client.

When receiving equity release information, the individual should be notified that equity release is composed of two variations. An equity release can either be in the form of a lifetime mortgage or a home reversion plan. For both schemes, the regulations on the contract termination remain the same. The contract comes to an abrupt end following the death of the borrower, or if the borrower occupies indefinite residency at a care home.

Lifetime mortgages work on the basis that the borrower is provided with a loan, which must be paid back when the contract expires at latest. Lifetime mortgages consist of three sub-products, interest only schemes, interest rollover schemes and home reversion plans.

An interest only scheme enables the borrower to make the mortgage repayment during the period when the contract terminates, yet interest is still paid monthly. With an interest rollover scheme, the borrower is granted permission to pay back all interest along with the mortgage at the end of the contract. However, if interest rates have been arranged to be variable, interest is calculated monthly and totalled to the sum of the mortgage loan. Home reversion plan enable the borrower to use the newly received cash to obtain an annuity, providing a fixed lifetime income for the borrower. The borrower may use this annuity to pay off the mortgage and additional interest in monthly instalments.

Benefits of lifetime mortgages include the borrower holding onto the ownership of his/her property, enabling the borrower to make their own plans for the future of the home. In addition, some equity may be sustained in the estate following the borrower’s death, which can be benefited from the beneficiaries of the borrower.

However, the loan received by the borrower is of low proportion compared to the value of their property. On top, increasing interest rates may surpass the properties growth, leaving little equity to the borrower’s successors. A no negative equity policy is incorporated into the arrangement, so if the sum of the debt exceeds the property value, that difference is paid back to the borrower or his beneficiaries. To receive precise and reliable information based on the diverse range of lifetime mortgage schemes, our specialist advisers are available to contact.

Home reversion enables providers to receive part, or all of the homeowner’s property in exchange for a lump sum of cash or an annuity, which provides the borrower with a fixed lifetime income. The borrower is also promised lifetime residency to the property, however after their death the property is sold on the market. The proceeds of the sale will be entirely received by the provider on a full home reversion scheme, whilst the legacy of the borrower is entitled to some proportion of the proceeds in a part home reversion scheme.

Home reversion plans may work to the borrower’s benefit, due to the borrower being safe in the knowledge that they have residency in the property for the remainder of their days. Moreover, the borrower doesn’t need to make any form of payment to the provider, so the income can be used as the borrower desires. However, the borrower must however realise that they have conceded ownership of the property, preventing them from future planning in regards to the home. There will also be no equity left in the estate for the borrower’s inheritors to reap from.

Selecting an appropriate equity release scheme may be very demanding for an individual, as there are many drawbacks and limitations associated with each unique scheme. However, if the client receives precise equity release information they will be able to make a decision with less confusion. Our advisers take pride in providing this information and are specialised in supporting each client’s decision to go through with an equity release plan.

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