The Concept Explained
Equity release has become an increasingly common way for homeowners across the UK to fund their dreams in later life. Rising house prices across the UK over recent decades means that the UK’s over-55s have more equity than ever locked up in their properties, equity that can be accessed using a Lifetime Mortgage, the most popular form of equity release.
With a lifetime mortgage, unlike other forms of equity release, you can release tax-free cash from your home whilst retaining full ownership of your home, and without having to commit to making monthly repayments.
How Does Equity Release Work?
Equity release comes in two main forms – lifetime mortgages and home reversion plans. At Responsible Equity Release we only advise on lifetime mortgages as with a lifetime mortgage you retain full home ownership.
To release equity with a lifetime mortgage you must be a UK homeowner aged 55 or over, and the amount of cash you can release from your property depends on your age and property value. The lifetime mortgages don’t come with a fixed end date, rather they are only due for repayment once the last homeowner on the deeds either dies or enters into long-term care. Interest is charged on the amount released, with interest rates typically fixed for life. If you do not choose to make repayments over the course of the loan, then the amount borrowed, plus interest is simply repaid at the end of the term, often via the sale of the property.
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