With a lifetime mortgage, you can apply for a loan that’s secured on your home once you reach 55, although where two people are planning to take out a joint plan, the youngest must be at least 55.
You can chose a scheme that pays a lump sum, or one that pays smaller amounts – known as drawdown. This option can prove useful if you don’t know how much you expect to need, as you can take as little as you require and only pay interest on what you withdraw.
You can also take out an interest-only lifetime mortgage, which sees interest paid on a monthly basis. As with any lifetime mortgage, you retain ownership of your property until you die or go into long-term care, at which point the balance is to be repaid, usually out of the proceeds from the sale of your home.
The amount that can be borrowed will depend on your age and the value of your property.
Home reversion plans
The majority of those taking out equity release plans do so using a lifetime mortgage, however, an alternative way of releasing equity is to consider a home reversion plan.
Unlike lifetime mortgages, you would not retain ownership of your property if you took out a home reversion plan. Instead, you sell all or a percentage of your home to a specialist firm, receiving a lump sum, regular payments or both in return.
Although you no longer own the property, you are granted a ‘lease for life’, which ensures you can live at the property rent-free, until you die or go into long-term care. The property is then sold with the amount owing to the plan provider paid and the balance issued to the customer or their estate.
Home reversion plans can normally only be taken out if you are aged 60 or over.
Call now on 01204 884545 for more information on Equity Release Plans