What is the difference between lifetime mortgages and home reversion plans?
Lifetime mortgages tend to be the most popular option with homeowners, as it enables you to still remain the owner of the property. You can take out a mortgage that allows you to have interest ‘roll up’ over time, meaning that unpaid interest is added to the loan. With the second equity release product, home reversion schemes, you sell a percentage of your property (or all of it) to a home reversion provider. In both types of equity release, it may be possible for you to ring-fence a percentage of the value in your home, so that it can be passed on as inheritance.
When would you use equity release?
This kind of funding can be used for multiple purposes. For example:
1.Help family members to get onto the property ladder. Releasing assets within a property in order to help out family buy their own home is a popular reason as to why retired homeowners use equity release, as you have the opportunity to release money in one lump sum.
2.Finance renovations within your home (such as a new kitchen or bathroom) perhaps needed as a result of reduced mobility in you or your partner’s later years.
3.Make the most of retirement and free from the responsibilities of work, by opting to use the money freed up from their property to go on holidays, or to finance big purchases such as a new car.
4.Top up your monthly income in your retirement. This means that you would not need to worry about whether or not you would still be able to continue your way of living prior to stopping working, meaning that you can live comfortably and stress free. In this scenario, you may choose to draw out equity release payments rather than receive it as a lump sum so that you can withdraw money as and when you need to.
5.Equity release is frequently used by people who were previously self-employed, as they may not have had a private pension, and would like to supplement their state pension income
6.Equity release can also be used to help make mortgage repayments, as well as any other outstanding debts, helping to provide you with peace of mind.
7.Release assets in your property without having to downsize, as with equity release you can still unlock housing wealth and can remain in the property for as long as you like, as whilst you may potentially give up some (or all of your ownership) through a home reversion scheme, you still have a legal right to stay in the house until you die or move into long-term care.
Apply for equity release
We work with a number of leading equity release providers in the country and can help you to find the right product that will best cater to your individual circumstances, helping to make the application process stress-free, guiding you every step of the way, whichever equity release product you decide to choose.
Equity is used for personal financial reasons which is different to the bridging loans that we typically offer. Our products are common for property developers and buy to let investors. Nonetheless, there is a real cross over between the products and we are proud to offer an effective solution to help you with what you need.