Equity release makes it possible to access the wealth tied up in your property without moving. Lifetime mortgages and home reversion are ways to turn home equity into lump sums or regular cash payments. Explore the possibilities and make the most of your home equity!
What Is Home Equity?
Home equity is the difference between the market value of your home and the outstanding balance of any mortgages or liens against it.1 Essentially, it represents the portion of your property that you truly own. Building home equity can be achieved through mortgage payments and property value appreciation, making it a valuable financial asset that can be utilized for various purposes, such as securing loans, funding home improvements, or supporting retirement plans.
Equity release is a financial product that allows homeowners aged 55 and over to access the value of their property without having to move or make monthly repayments. It is a way of unlocking the wealth that has been built up in a property over time.
Lifetime Mortgages and Home Reversion
There are two main types of equity release products: lifetime mortgages and home reversion plans.2 Lifetime mortgages allow homeowners to borrow a percentage of the value of their property, with interest paid only on the amount withdrawn. The loan is secured against the property, and there are no monthly repayments. The interest is added to the loan balance and repaid when the homeowner dies or moves into long-term care.
Home reversion plans provide a tax-free lump sum in exchange for a share of the property’s future sale proceeds. The homeowner retains ownership of the property and continues to live in it, but they will receive a smaller share of the sale proceeds when the property is eventually sold.
Access Cash From Your Home
Equity release can provide homeowners with a way to access the value of their property without having to move or make monthly repayments. This can be a particularly attractive option for retirees who want to supplement their income or pay off debts but do not want to downsize or take on additional monthly expenses.
Lifetime mortgages are the most common type of equity release product, and they allow homeowners to borrow a percentage of the value of their property, with interest paid only on the amount withdrawn. The loan is secured against the property, and there are no monthly repayments. The interest is added to the loan balance and repaid when the homeowner dies or moves into long-term care.
Home reversion plans provide a tax-free lump sum in exchange for a share of the property’s future sale proceeds. The homeowner retains ownership of the property and continues to live in it, but they will receive a smaller share of the sale proceeds when the property is eventually sold.
Learn More About Equity Release
Equity release can be a complex financial product, and it is important to seek independent financial advice before taking out an equity release plan. There are potential risks and drawbacks to consider, such as the impact on inheritance, the potential for negative equity, and the potential for future interest rate increases. With that said, tapping into your home equity through equity release can have many positive impacts — explore the possibilities and see if it makes sense for you!