Home Equity Release Schemes

Home Equity Release Schemes

Home equity release schemes are mortgage products intended for individuals to generate monetary funds from the worth of their property. Home equity release-schemes are offered to mature individuals who surpass the age of 55. Home equity release schemes may serve the purpose of supplying a sufficient income to individuals who are hoping to maintain a reasonable standard of living. Other individuals are likely to arrange home equity release schemes in order to fulfil personal ambitions, such as travelling. Our purpose is help clients arrange suitable and convenient home equity release schemes, in regards to their financial situation.

As it stands, there are two forms of home equity release schemes available; lifetime mortgages and home reversion plans. Lifetime mortgages offer the borrower the prospect of reimbursing the mortgage interest accrued, i.e. at the event of the death of the borrower, or the plan holder moving into residency in a care home for an indefinite period. If an individual wishes to receive more information on the various home equity release schemes, our advisers will guide them in depth through each type, including the advantages and disadvantages of each scheme.

There are three sub-categories within a lifetime mortgage, the first being interest only schemes. The borrower is obliged to make monthly payments of interest to the provider, yet the mortgage need not be paid until the contract is terminated.
An interest rollover scheme is similar to an interest only scheme, yet this scheme differs in the sense that the borrower is enabled to repay interest payments along with the mortgage and the end of the contract. Rollover interest lifetime equity release mortgages enables the borrower to pay the interest along with the mortgage at the end of the contract, however interest is determined from month to month and attached to the final debt. Another lifetime mortgage product is the home income plan. The borrower is ordered to make monthly mortgage and interest payments, instead of repayment of the mortgage at the end of the contract.

Home reversion plans are a less common version of home equity release schemes. Here, the plan holder obtains a lump sum of cash, which may be used to the borrower’s intentions. In return, the provider is at liberty to receive ownership to certain proportion of the homeowner’s property. A full home reversion plan ensures the provider receives full ownership of the borrower’s property, whilst a part home reversion plan enables the borrower to maintain some of the shares in the home. The borrower is also offered a lifetime occupancy guarantee at their property, under the condition that the provider sells the property on the market after the contract has been terminated. In a part home reversion plan, the children and the beneficiaries are entitled to receive a proportion of the proceeds from the properties sale.

Home reversion plans offer a number of benefits, with higher cash sums often received by the borrower in a home reversion plan, compared to a lifetime mortgage.
Additionally, no monthly income payments are required, so the lump sum of money can be used at will by the borrower. On the other hand, the owner concedes ownership to the property and therefore concedes the right to pass on the equity from the property onto his/her inheritors in a full home reversion plan.

Equity release schemes are accompanied with many risks and benefits, which mean they may not be suitable for all individuals who are interested in them. Our specialist team of advisers aim to achieve the most beneficial and suitable home equity release schemes for all our clients.

If you have any queries regarding home equity release schemes, contact our team 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.