In short, equity release provides you with the opportunity to obtain capital which is currently tied up in your home by taking out a loan on the property, whilst maintaining ownership.
You can access this money as a lump sum figure or split over several intervals with interest. Alternatively, you can use a combination of both of these methods.
The money that you borrow is charged at a fixed interest rate, however most schemes do not require you to re-pay in monthly instalments because the mortgage is not usually paid off until you die.
Some providers use a variable interest rate, however these have to be capped, ensured by the Equity Release Council.
If your lifetime mortgage does allow you to make payments to start paying off the interest, the cost of the mortgage will be reduced. These newer form of lifetime mortgages are known as ‘drawdowns’ in which a set amount of money is reserved for you and you can withdraw smaller sums of money at different times up to that predetermined limit.
This is more suitable for people who do not need a large sum straight away as you are only charged interest for the amount you have taken. The cost of your repayments may be determined by your income in order to ensure that you can afford to meet these payments.
To be eligible for an equity release lifetime mortgage, you have to own your property and also be over 55 years old. Make sure to note that you don’t have to have paid off your entire mortgage to be eligible for a lifetime mortgage. In order to decide whether a lifetime mortgage is the best equity release option for you, you need to consider your income, the amount of money you wish to access and your future plans.
The money received from these mortgages can be used for anything you wish, making these a popular equity release option for people who are retiring, enabling them to boost their pension or fund retirement plans. For more info on equity release see https://regowealth.com/