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The equity or value in your home is its open market value, minus any mortgage or other debt you have secured against it. Equity Release is a way of accessing the cash tied up in your home, without having to move out.
How does it work?
The two main methods of Equity Release are:
1. Home Reversion
One method of releasing the equity from your home is to sell part or all of your home to give you a regular income, a lump sum, or both. You can continue to live there. This is called a Home Reversion Plan.
For more detailed information on Home Reversion, please click on our guide: What is Home Reversion?
2. Lifetime Mortgages
Another way is to borrow a lump sum secured against your home. This is called a Lifetime Mortgage.
With lifetime mortgages, you take out a loan that is secured on your home. You continue to live in your home, although you have to pay back the mortgage. The mortgage is repaid from the proceeds of the sale of your home when you die, or if you move out or move into care.
How do I get my money?
You usually receive your money as a cash lump sum, to use as you wish. This does vary from plan to plan, and differs depending whether you opt for a plan that provides cash upfront, or an income plan.
Things to think about!
It is important to be aware of the different products available and the positive and negative points of each type of plan. As with any big decision, you need to explore all the options available to you first. SYH Charterhouse recommends that you seek advice before deciding on what route is best for you.
As it is an important decision about your home and your future, SYH Charterhouse also recommends that you consult your family if you are considering any Equity Release product.
Remember that equity release is not right for everyone. Do your
Homework, seek legal advice, and explore all the options available to you.
Make sure that a particular plan is suited to your own circumstances and needs before you proceed.
- To qualify for equity release, you must be over a certain age. Age limits vary between companies, but for individuals in the UK you must be at least 50 years old.
- Depending on the plan, you can get a cash lump sum, regular income, or both, to use as you need.
- You can continue to live in your own home
- You may continue to be responsible for the maintenance of your home.