Lifetime Mortgage Equity Scheme

Equity release plans are scheme in which the property or homeowners can get a loan on the equity built up on their property. This is in general given to old homeowners who do not get regular mortgage easily or have very little or if no money to make the regular repayment of such loans. There are two types of schemes for the equity release and includes lifetime mortgage and home reversion schemes.

Lifetime Mortgages is a type of equity scheme which is most prevalent in the market and is generally given to people whose minimum age is 55 years. In this scheme the homeowner or the property owners can take loan on the same in the form of lump sum money, regular income or both of these. In this scheme the owner of the property remains the same and it is not sold. There is no need to make any monthly repayments in this and the interest in this case gets rolled up on which the compounding effect applies and very soon the amount that you owe increases.

One of the types of lifetime mortgages is the “drawdown” version. This scheme is designed for all those who will not require much of the lump sum amount of money. In this, a pot of money is set separate for the borrower to withdraw as per his/her requirements. The advantage is that the interest is levied only on the amount you release and hence it enables you to save lot money.

The benefits of going for equity release are:

  • The lump sum of money you got through equity release is tax free
  • You do not require to move out of your home
  • The best thing is that you can also guarantee an inheritance of the property for your family.
  • With most of the plans, you can move out of the property without any financial liability.