What’s equity release

Equity release is a way to assist increase your funds in later life by unlocking some of your house’s value.

Your property’s price, minus any outstanding mortgage or loans secured towards it, is its equity. This equity is often passed on as an inheritance; however, via equity launch, you may access a few of your property’s value tax free.

Our equity release products are available for houseowners aged 55-eighty four whose property is worth at least £ninety nine,000. However, not all equity release plans work the same. This web page is here to help make the differences clear so you can make the correct resolution in your circumstances.

How does equity launch work?

The type of equity launch you choose will determine how it works. The commonest form is a lifetime mortgage; of which there are types – lump sum and drawdown. We’ll go into a bit more detail on these below.

The other form of equity launch is a house reversion plan. Home reversion plans are completely different to a lifetime mortgage. With a home reversion plan you will sell part or all your dwelling to the home reversion company at less than its market value. In exchange you will receive a tax-free lump sum. You will not own your own dwelling, though you’ve the correct to live there rent free.

However the main premise of a lifetime mortgage is that it might allow you access to at the very least £10,000 in tax-free money by securing a loan in opposition to your property. Nevertheless, unlike most different secured loans, there are typically no monthly repayments so that you can make – unless you select to.

That’s because the loan, plus compound curiosity, is repaid when your plan ends, which is often when the last remaining applicant either enters long-time period care or passes away. Meaning you could access 1000’s of pounds in tax-free cash to assist increase your later life funds without the concern of budgeting for repayments.

How much you could possibly release will depend upon just a few different things, together with the value of your property, any outstanding loans or mortgage secured against it, and your age.

Normally, the older you are, the more you’re able to release. However keep in mind, if it’s a joint application, the age is predicated on the youngest applicant, fairly than the oldest.

It’s also essential to note that if you have an present mortgage or any other secured loans against your property, they’ll have to be paid off first. You should use the cash you release to try this – but doing so will reduce the quantity you must spend on other things.