Equity release schemes help you live through your golden years with contentment and comfort. These schemes help you enjoy life without any money worries. If you want to release equity from your property, then equity release schemes can be the ideal solution for you.
What can equity release schemes do for you?
Equity release schemes let you release some of the cash that is tied up in your home and permit you to stay in your own house after release of this equity. The money received from equity release schemes is tax exempt and free to use as you wish.
You need to be a minimum age of 55 years to be eligible for an equity release scheme. The one condition when you take out a scheme is that any outstanding mortgage payments must be paid by the money you receive from the scheme. Equity release schemes are available in two distinct types - home reversion equity release schemes and the lifetime mortgage schemes.
How does a lifetime mortgage scheme work?
You will receive money against the value of your property. You can take the money as a lump sum or monthly payments. In some cases, you may be allowed a combination of both. You will be allowed to occupy your home till you pass away and there is no tax to pay on the amount given released. You will be charged interest on the money raised which can be added monthly or annually dependent upon which equity release companies are used. The interest is then compounded over the years & you will receive an annual mortgage statement informing you of the current mortgage balance. This will continue indefinitely until both parties have died or moved into long term care. At that point the property will be sold by the executors of the estate with the equity release balance primarily repaid first, with the resulting balance dished out in accordance with the property owner’s wishes or their Last Will & Testament if they have left one.
What is a home reversion scheme?
Not as common as lifetime mortgage's, a home reversion is the more traditional form of equity release. With these the home reversion corporation will buy a percentage of your home. This can be any percentage of the property, even upto 100% of its ownership.
You can continue living in it until you pass away without any interest on the amount you borrow. Even though you do not fully own your own home, you are still responsible for its upkeep & maintenance & the home reversion providers periodically checking the condition of the house. Eventually on the remaining person dying or moving into long term care, the home will be sold and the money will be recovered by the home reversion mortgage company.