Equity release is a way to release money by way of a loan secured on your home or through the sale of all or part of your home, subject to certain rights to remain in occupation.
This process gives you the option to take a variable cash sum which you might then reinvest to provide an income or use to pay for that luxury holiday, home improvements or alterations, or perhaps to provide additional retirement income.
The most popular scheme is known as a Lifetime Mortgage. In this case, interest charged by the mortgage lender can either be paid monthly or accumulated and added to the original equity you have released, the sum of which is only paid once your home is sold. You have the comfort of knowing that you can stay in your home until you either die or move into a long term care home.
You can usually raise any sum from as little as £10,000, although there is a general requirement that you are over 55 years of age and have equity in your home of £150,000 or more. Most mortgage lenders offer more the older you are.
This is largely dependent on the perceived likelihood of price corrections in certain areas which might make equity release loans more ‘risky’ to lenders. A home valued at £500,000 might, therefore, enable a homeowner to raise as much as £175,000 through equity release.
Most lifetime mortgages now come with a “no negative equity guarantee”, which means that you will never owe more than the value of your home. Furthermore, whilst your children will not ‘inherit your debt’, your estate will be liable to repay the lifetime mortgage (and accrued interest) upon your death. Therefore, your estate will be reduced.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
The Bank of England Governor, Andrew Bailey, has advised that, due to the “very big energy shock” the economy is facing, they won’t be in a rush to increase UK interest rates.
Best UK Mortgage Rates this Week
2 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Many homeowners don’t realise that a simple act or oversight could invalidate their home insurance policy. Home insurance is essential in protecting your most valuable assets; however, it is important to understand what affects your cover to ensure you are fully protected.
In certain areas, impressive views are one feature that buyers are willing to pay price premiums of more than 30 per cent.
The UK mortgage market is seeing lenders withdraw deals and hike mortgage rates amid the escalation of conflict in Iran. This isn’t great news for borrowers, with the average rate for a two-year fixed deal sitting above 5%.
Statistics now show that those looking to purchase a property would have to save a deposit bigger than their annual gross pay.
Analysis from the Office for Budget Responsibility (OBR) shows that those looking to buy their first home could face a sharp increase if house prices follow the latest predictions, as Coventry Building Society suggests.
According to Zoopla, four in 10 homes are now cheaper to buy with a mortgage than to rent due to lower-cost mortgages - a sign that ownership is becoming more affordable.
More information
Trusted by
