Repay outstanding debts & mortgages to reduce outgoings
Give your savings a boost in case of emergencies
Increase your income
Start a new hobby
Enjoy life’s little (or big) luxuries
Holiday for you and the family
Provide a deposit for your children or grandchildren
Set aside funds for education needs
Put funds in to Trust for Inheritance Tax planning
Equity release is a term used to describe the action of raising money from your home without the need to move out of it.
There are two main types of scheme in use at present:
This is a loan secured on the home to provide either a lump sum or regular monies at specific intervals.
The homeowner continues to own the title deed and the mortgage lender simply places a first charge on the property to secure their financial interest on sale.
As these mortgages are generally utilised to provide much needed funds, the compulsion to repay interest on the loan or repay the capital is normally waived. Instead, the interest due is added to the loan on a monthly basis, called a ‘roll-up’ mortgage.
This means that the loan increases by the amount of interest owed on a monthly basis. The compound effect means that the mortgage debt increases each and every month until the mortgage is eventually repaid from the sale of the property.
If the mortgage remains on the property for a number of years, the final mortgage outstanding including the accrued interest could leave little or no remaining funds for your beneficiaries.
The rate of interest is normally fixed from outset and can remain fixed for the life of the mortgage.
The fundamental difference is that with this option you sell all or part of your home for a capital sum or regular income.
To secure your right to live in the property, a lease is created so that you can remain in the property for the rest of your life, or until you move permanently into a care home or sheltered accommodation.