Equity Release

What is equity release?

Equity release is used when a homeowner wishes to release money from their home without making any repayments. It is restricted to people who are over 55 with a relatively small or no mortgage on their property. The two most established ways to do this are by either a home reversion scheme or a lifetime mortgage.

If you're a homeowner aged over 55, equity release could help you to free - or 'release' - equity from your home, so that you’ve got extra cash to spend on the things you want or need.

It is important to note the differences between equity release plans such as home reversion and lifetime mortgages compaired to tradional forms of finance such as homeowner loans and remortgages.

Home Owner Loans and Remortgages

If you are looking to raise money for your home for virtually any purpose (debt consolidation, home improvements, a luxury holiday) and intend to make repayments to the lender then you should consider a loan or remortgage. These are available for people with regular income, those who own a property or those who pay a mortgage on a property and are aged between 18 to 75.

Equity simply refers to the difference between what your property is worth and any outstanding loans, such as a mortgage loan secured on the property. For example:

• Your house is worth £150,000. You have retired and paid off all your debts, including the mortgage. Your equity is £150,000.
• You bought your house for £100,000 with the help of a mortgage of £80,000. The value of the house is now £200,000 and the outstanding mortgage is £10,000. Your equity is £190,000.

It’s entirely up to you what you spend your equity on and how you receive it - you might want a one-off lump sum or you might choose regular monthly installments.