What You Need To Know About Equity Release

Equity release is a fantastic option for many homeowners. When choosing your plan, there are several factors you must consider and things you need to know to choose the best option for your specific needs.

Essex Equity Release offer advice regarding what equity release is and which plan is right for you. you can always depend on us for a detailed consultation.

Lifetime Mortgages or Home Reversions

When choosing your equity release plan, you have the choice of two schemes, which are lifetime mortgages and home reversions. Lifetime mortgages are the most popular option and are available for all homeowners over the age of 55. With a lifetime mortgage, you will borrow money against the value of your home with a fixed or capped interest rate. Whilst some plans give you the option of monthly repayments, this plan will mean your interest builds up for repayment.

To take out a home reversion plan, you must be over the age of 60. With this plan, a provider will pay for part of your home at below market value. You can continue to live in the home rent-free, however, you will not own the entire property. When the property is sold, proceeds of the sale are split based on the percentage you and the lender own. If you sell 40% of your property, then when the property is sold, your lender will receive 40% of what the property is sold for.

Lifetime mortgages are often more popular as, although the interest will build up to be repaid at the end of the plan, you receive the full amount of what your home is sold for, before making repayments. With a home reversion, it means you could lose money if your property value increases between when you select the plan and when you sell the home.

With both schemes, you can stay in the home, rent-free. The plan will come to an end when you and your partner pass away or move into long term care.

Risks Of Equity Release?

As there are now many more plans and providers available, it means finding a suitable and safe equity plan is much easier. All plans that we advise on are approved by the Equity Release Council. This ensures you have a No Negative Equity guarantee, never leaving you in debt. However, there are still some risks to equity release, meaning it is important to seek advice first. This will ensure you choose the option that is right for you and not just the provider.

As your equity release plan ends when you and your partner either pass away or move out, this means early repayments could be possible if this occurs sooner than expected. If you are required to make an early repayment, it could lead to an additional fee, meaning you would have been better off without releasing equity. Whilst these scenarios are unpredictable, it is important to prepare for the worst situation to ensure you make the right decision.

With a range of plans available, it means you can find a plan that is tailored to your specific needs. Each plan will have different criteria. This can include the option for features such as moving home, making early repayments or monthly repayments and therefore your plan becomes less risky, which is ideal for most homeowners.

Are You Eligible?

Before releasing equity on your home, it is also important to make sure you are eligible for equity release plans. There are several conditions you must meet to be eligible for lifetime mortgages or home reversion equity plans. This includes:

  • How Much Outstanding Debt You Have On Loans or Existing Mortgages
  • Own A Property In The UK
  • Property Must Be In Reasonable Condition & Over a Certain Value
  • Whether You Have Any Dependants Living With You
  • You (or Both of You) Must Be Aged 55 or Over for a Lifetime Mortgage
  • You (or Both of You) Must Be Aged 60 or Over for a Home Reversion

Depending on the plans you are interested in, there could also be several other conditions that must be met. Alternatively, you may only have to meet small criteria.

Contact Us

For more information regarding equity release and what you need to know, contact Essex Equity Release. We can provide a fast response to all clients, regardless of where you are located. Booking a quick consultation via email, phone call or face to face, you will receive the advice you need. Call us today on 01268 799211 or fill in our contact form to make an enquiry.