What is Equity Release?

Equity release is types of schemes which enable the owner to take cash from the equity which is built up on their property. The equity release is mainly for the older homeowners who generally will not be able to get the regular mortgage or if they get it is after a lot of struggle as they have too little income or no income as such to pay the regular repayments. Equity release plans enable the homeowners to tap the value of their property without actually selling it or moving out of it. There are mainly two types of equity release, lifetime mortgage and reversion plans. The decision to choose one of them is what you will have to do if you want to go for equity release.

When going for equity release it is good idea to take advice both legal as well as financial. If you extract money from your home, many aspects of your finances can get affected, which include your eligibility for any means-tested benefits or even the value of your property when you die. Taking financial advice will help you understand the plan you are taking and if there will be any negative implications of getting the equity release.

Lifetime mortgage is a type of equity release in which you can get a lump sum of money or an income and even a combination of both as a loan on your property. However, you still own your property. On the other hand, the second type of equity release is home reversion schemes in which you happen to sell a part or whole of your home to one company who allows you to have lump sum of money or a regular income along with the right to stay in your own house. However, this scheme accounts for a very small part of the market.