Equity release, or a lifetime mortgage as it is also known, allows homeowners (typically over the age of 55) to release cash from their property tax-free. The amount that can be borrowed is determined by the age of the applicant and the value of their home. As a general rule, the most that can be borrowed via an equity release lifetime mortgage is 60% of the value of the property.
Interest rates on an equity release loan tend to be fixed, or if they are variable, must be capped/have an upper limit which is then fixed for the lifetime of the loan.
One of the major advantages of a lifetime mortgage or equity release is that the borrower retains 100% ownership of their home, and has a right to remain within their property for life or up until a time in which they are required to move into long term care. In addition, the borrower is not required to make any repayments towards the balance of the loan whilst they are alive/live within their property.
Finally, all lifetime mortgage products provide a no negative equity guarantee which simply means that when the property is sold, even if the amount raised fails to cover any outstanding fees, neither the borrower nor their estate will be liable to cover the shortfall.
Equity release is an incredibly popular means of raising cash in later life and is growing in popularity every year (an average of 35000 people use equity release every year!).
The decision as to whether it is right for you will very much depend on personal circumstances such as age, income and how much cash is required. It is also important to note that equity release can be taken in stages (smaller amounts) and the borrower can also ringfence a certain percentage value of their home to gift to family/loved ones via inheritance.
Cash released via equity release or a lifetime mortgage can be used for any purpose and advice is offered for free, on a no-obligation basis.
To find out if you qualify, and calculate how much you could release from your home, simply complete our online form on this page, or head over to our contacts page