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equity release

An equity release plan allows homeowners over the age of 55 to release tax-free cash from their homes without the need to move.

Typically there are four types of equity release plans:

Lifetime mortgages - a loan secured against the property, that accrues interest like a standard mortgage ( which can be paid monthly or added to the capital sum) until the loan is repaid when the property is sold, usually on entry into long-term care or death.

Drawdown plans - a drawdown lifetime mortgage has the same advantages and disadvantages as a regular lifetime mortgage ( as per above). The main difference with a drawdown plan is that the clients are provided with a borrowing limit based on age and property value ( at the time of application) and they 'drawdown' the cash in stages when they want to.

Home reversion plans - part or all of the property is sold in exchange for a tax-free cash lump sum and a guaranteed lifetime lease with no monthly repayments to meet.

Home income plans - with a home income plan, equity is release through a lifetime mortgage or home reversion plan, and is automatically invested into an annuity that is built into the plan, to generate an income for life. A cash lump sum may be available in addition to an income, but the amount may be restricted.

What safeguards are there?
Most providers are part of the Equity Release Council (used to be known as SHIP) and their approved plans all come with a set of guarantees to ensure a client's safety:
  • The right to remain in their home for as long as they choose
  • The freedom to move to another property without financial penalty (subject to lenders' criteria)
  • That they will receive a cash lump sum or a regular income
  • That they will never fall into negative equity no matter what happens to house prices in the future

The Mortgage Monkey Ltd is proud to be a member of the Equity Release Council.

For more information, please contact Mark Williams, our qualified Equity Release specialist on 07737267404 / mark@themortgagemonkey.co.uk


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