What is equity release?

When you release equity from your mortgage, you are able to access the value of your home without having to sell it.

This strategy is designed for homeowners over the age of 55 (I would link this to the page on “55 and options”), many of whom want to top up pension pots or cover unanticipated expenses. When you release equity, it can be paid out in either a single lump sum, or it can be used to provide regular, ongoing income. If you are thinking about releasing equity from your mortgage but are uncertain about whether you should, we can help explain the consequences and provide you with honest, impartial advice.

The basics

There are two products that will enable you to release equity – a lifetime mortgage and a home reversion scheme. With a lifetime mortgage, you can secure a loan against your property and continue to live in it, and decide whether or not to make monthly repayments as usual or to let the interest on your loan accrue. The loan amount and any interested that has mounted up will then be paid back when your home is sold and you move into long-term care or when you die.

With a home reversion scheme, you can stay living in your residence, but you do sell part or all of your home to a reversion provider in order to do so. They will then pay either a lump sum or ongoing payments, on the provision that you stay living in your home while continuing to insure it and take care of the maintenance. When the property is eventually sold, the proceeds are divided between you and the reversion scheme, and will be done so according to the percentage of ownership.

In order to release equity from your home, you should ideally have just a small amount left outstanding on your mortgage. For this reason, it is only available to older homeowners who have already paid off the majority of their loan.

Interested in releasing equity?

There are a great many things to consider when determining whether or not to release equity from your home, and at My Mortgage Finance, we can explain all of the things to be mindful of to help you make the right choice.

For example, home reversion providers will buy your home for less than market value, or if you release equity from your home, you may not then be able to rely on your property for money if you need further capital for something unexpected like live-in care. We know that each personal decision to release equity is just that – personal. That’s why we will take the time to examine all of your options and provide you with the help you need to make a smart and informed decision.

To find out more, get in touch with us today.