What Is Equity Release?
Equity release is a way of releasing some of the equity tied up within the bricks & mortar of your property. After seeing the value of property rise over the decades, people over the age of 55 have built up significant value in their homes. Being able to access & withdraw this equity in the home is the process by which is known as equity release. Equity release schemes come in two formats – Lifetime Mortgages & Home Reversion Plans. To understand the differences please visit Ask Equity Release for further details. Lifetime mortgage plans now account for over 98% of all equity release schemes taken out due to their flexibility & the fact that the majority of people with to retain 100% property’s value.
Equity release in principle is a lifetime mortgage whereby an initial amount of money is released & thereafter attracts interest on a monthly or annual basis, dependent upon the lender. Whether repayments are then made or not will determine how the balance either compounds & grows, or interest repaid and the lifetime mortgage balance remains level. The end of the plan is when the last homeowner has died or moved into long term care. At that point the property is usually sold in order to pay back the lender, with any remaining balance passing to the beneficiaries.