Equity Release on Property

Equity Release on Property

Equity release on property refers to numerous mortgage arrangements specialised for individuals over the age of 55. Equity release on property enables an individual to generate a lump sum of cash by securing a mortgage onto their home. Our equity release advisers are essential when seeking equity release on property schemes, as they will provide accurate information on each scheme and recommend the most suitable equity release on property scheme for each client holistically.

Equity release on property is comprised of two main products; lifetime mortgages and home reversion plans. All arrangements related to equity release on property come to an end when the borrower dies, or is moved to a care home for the remainder of their days.  

Lifetime mortgages require the borrower to repay the borrowed loan amount to the provider, by the end of the contract. They are made up of three alternative schemes; interest only, interest rollover and home income plans. Interest only schemes work by allowing the borrower to repay the full sum of the mortgage to the provider after the contract is terminated. The borrower must still issue monthly payments of interest to the provider. This scheme slightly differs from an interest rollover scheme, where the borrower does not need to make monthly payments. Interest is calculated on a monthly basis and added to the mortgage total. Home income plans entail the borrower repaying mortgage and interest via monthly payments

An encouraging feature of arranging a lifetime mortgage is the fact that the borrower does not concede ownership of the property, enabling them to make future plans in regards to their home. Furthermore, lifetime mortgages enable equity to remain in the home after the homeowner dies, which may be obtainable by the homeowner’s beneficiaries. Conversely, the loan the borrower receives may be of low proportion compared to the value of their property. Increasing interest rates may surpass the rise in the price of the property, leaving less equity to the borrower’s successors. A no negative equity policy is included in the arrangement, so if the total debt exceeds the property value, that difference is paid back to the borrower or his beneficiaries. If you require any additional information on lifetime mortgage equity release on property products, contact our specialist financial advisers today.

Home reversion suppliers obtain part or all of the homeowner’s property in exchange money, which is either provided to the borrower as a lump sum of cash or a regular income. Older homeowners are typically eligible to generate a higher sum of cash through the arrangement. The provider will benefit from any rise in property value, as they are entitled to sell the property on the market at the end of the contract. However, the borrower’s beneficiaries are permitted to receive a proportion of the proceeds from the property’s sale, if the arrangement was a part home reversion plan.

Home reversion plans serve’s an advantage to the borrower, as there is no need for the borrower to administer any payments, enabling the borrower to use the capital as they wish. The borrower must realise that they will concede full ownership of the house on a home reversion plan, thus preventing them from making any future plans for the home. Also, the borrower’s beneficiaries will not be able to benefit from the full amount of equity left in the estate, as the provider has a share in the property.
Individuals contemplating equity release on property should seek alternative methods of generating capital or income before arranging an equity release on property, as it may consequence in avoidable debts, resulting in further financial problems. Our expert advisers are willing to seek an appropriate form of equity release on property for each of our clients, on the basis of their financial needs and requests.

If you wish to arrange an equity release on property product, contact our team of specialist advisers today.

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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.