release equity home

release equity home


A release equity home scheme is a method whereby of elderly individuals use the value of their home to extract a cash sum or a consistent income. Release equity home schemes are only tailored for individuals over 55 years old. The process either enables to provider of the release equity home scheme to receive full repayments of the mortgage, along with additional interest, or the provider of the release equity home scheme may be entitled to a share in the borrower’s current property. By contacting our team of release equity home specialists, clients will be advised on whether a release equity home scheme is a suitable option, catered to their needs. If so, our specialist clients sought to find the ideal release equity home scheme for each of our clients.

If the release equity home provider has a share in the borrower’s home, they are certified to put the home up for sale at the end of the contract. The contract is ended when the borrower passes away, or is transferred to a care home for an indefinite period. There are two alternate formats of release equity home schemes; lifetime mortgage schemes and home reversion plans.

Lifetime mortgage schemes give borrower the right to a loan, which is protected on the borrower’s residence. Interest that is paid back to the release equity home provider through monthly periods is known as an interest only scheme. Here, the mortgage is repaid during the termination of the contract (at death of the borrower), whilst interest may fixed or variable.

A scheme which presents the borrower with the opportunity to pay back interest along with the mortgage at the end of the contract is known as an interest rollover scheme. Instead of monthly instalments of interest being paid by the borrower, interest is tallied on a monthly basis and totalled to the final mortgage payment

Home income plans allow borrower to pay off mortgage and interest payments through monthly instalments. It is recommended individuals arranging the home income plan use money generated from the loan to buy an annuity, as it supplies a lifetime income, which can be used to pay the monthly mortgage payments. Interest rates are typically fixed on this form of lifetime mortgage.

Lifetime mortgage schemes may be useful as the borrower does not lose the ownership of their property. In addition, any equity remaining in the estate after the arrangement has dissolved may be of benefit to the borrower’s children or beneficiaries. Despite this, debts may become progressively larger if variable interest rates were to escalate over the course of the arrangement. In particular, younger borrowers who have a higher life expectancy will experience the drawbacks of interest rollover, as interest is given a substantial amount of years to roll up. With the consultancy of our specialist advisers, clients will have a wider understanding on whether a lifetime mortgage release equity home scheme will develop their long term financial wellbeing.

Home reversion plans are an alternative form of equity release loan schemes. Instead of the total mortgage debt being paid back to the equity release loan provider, the provider receives shares in the borrower’s home. In return, the borrower is guaranteed occupancy in the property until he/she dies, along with a lump sum of money. The borrower may arrange a full home reversion plan or a part home reversion plan. A full home reversion plan grants the release equity home provider with full ownership to the property, allowing them to gain all of the profit from the sale of the house after the contract has finished.

A part home reversion plan enables thr borrower to keep a share of the property. This allows the borrower’s beneficiaries to receive a proportion of the proceeds from the sale of the house. However, the borrower has no further influence on the future of the home, as home reversion plans enable the provider to sell the property on the market after the borrower dies.

An individual who is considering scheduling a release equity home scheme has to be clear on the risks associated with release equity home plans. Our specialist adviser’s aim to find a release equity home scheme that is accessible and suitable to each client’s financial requirements.

If you are interested in a release equity home loan, contact one of our specialist advisers today.

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