You might have heard of equity release. What is equity release ? This is a question that might have popped up in your mind several times.
Simply put, equity release is a way of releasing tied up cash from your property without having to make any monthly repayments. This sounds appealing right? It gets better.
There are many different types of equity release schemes. The home reversion plan is one of the most common types of equity release schemes. This equity release plan allows your property or a part of your property to be sold. You can choose for an immediate cash amount or you can choose for a monthly amount which you will receive for the rest of your life. Even better, you are able to remain in your home. Normally, when you sell your property or a part of it, you need to move out of your property. This is not the case with the home reversion plan. You are allowed to remain in your home until the death of you and your partner or until you both choose to enter into long term care.
Another type of equity release scheme is the lifetime mortgage which allows you to take a loan against your property. The repayment of this loan normally occurs at the death of you and your partner or until you both choose to enter into long term care. When this happens, the property is sold to repay the loan. There is no monthly repayment except for the interest only lifetime mortgage. The interest only lifetime mortgage is just like other forms of lifetime mortgages with the exception of monthly payments of the interest only. While the other types of lifetime mortgages add up the total of the initial loan amount and the accumulated interest amount to be repaid by selling the property, the interest only lifetime mortgage allows you to pay the interest on a monthly basis so that only the loan amount will have to be repaid by selling the property.
As amazing as all of this sound, there is a catch which is that equity release schemes are not meant for any and everyone. In order to qualify for equity release, you normally need to be fifty-five years or older and you need to own a property. Without your own property, your application will not be successful.
