What are equity release plans?
There are four different types of equity release plans:
Interest only lifetime mortgage: This allows you to borrow money against your home while still living there. You’ll have the option to pay all or part of the monthly interest. When your home is sold, your mortgage will be repaid. You have the option to switch this to a ‘roll up lifetime mortgage’ that doesn’t require monthly repayments at anytime.
Lifetime mortgage: Allows you to borrow money against your home while still living there, but you don’t need to make repayments. Instead, the interest is added to your mortgage. When your home is sold both are repaid.
Home reversion plans: Lets you sell your home, or a share of your home, in return for a lump sum of money. You’re able to live in your home rent-free for the rest of your life.
Retirement mortgage: A new type of lifetime mortgage that’s designed to bridge the gap between a residential mortgage and an equity release plan. A retirement mortgage is secured against your home and is repaid only when your property is sold.
These are breakdowns of the types of equity release available. It’s important to know that there are features and risks involved with each type and to fully understand these, you need to ask for a personalised illustration. This will outline the features and risks that are relevant to your situation and equity release plan. If you’re considering equity release, it’s important to get expert advice first.