What is equity release?
If you're in or near retirement you could consider using equity release to access some of the money tied up in the home, without the need to move. You can release a tax free cash lump sum or set up access to a flexible borrowing facility.
How much you can release varies between providers but usually depends on how old you are, the value of your home and sometimes your health.
The most common use of equity release is for home improvements but you could also use the funds to repay an existing mortgage, manage debt, supplement your income or pay for long-term care.
Types of equity release
There are three types of equity release: interest only lifetime mortgages, lifetime mortgages and home reversion plans.
Interest only lifetime mortgages let you borrow against the value of your home while you still live there. You can choose to repay all or part of the monthly interest and your mortgage is repaid when your home is sold. You have the option to switch from this to a lifetime mortgage at any time.
Lifetime mortgages similarly let you borrow against the value of your home but without the need to make repayments. Interest is instead added to the mortgage and both are repaid in the future when your home is sold.
Home reversion plans let you sell all or a share of your home at a discount in exchange for a cash lump sum and rent-free lifetime tenure in your home.
These arrangements may involve either a lifetime mortgage or home reversion plan. To understand the features and risks ask for a personalised illustration.