WHAT IS EQUITY RELEASE?

Equity release is a product that allows you to unlock cash from the value of your home.

The type of equity release we advise upon are lifetime mortgages. It’s a long-term loan on the value of your home, which is repaid, usually from the sale of your home, when you (and your partner, for joint lifetime mortgages) die or need to go into long-term care.

Whatever financial freedom means to you in later life – renovating your home, helping your children, or simply boosting your income – equity release is designed to help.

HOW DO INTEREST AND REPAYMENTS WORK?

You don’t need to make any monthly repayments. Instead, interest is added each year, both to the initial loan amount and any interest previously added, which quickly increases the amount you owe. The interest rate is fixed, so it won’t ever go up.

For example, one year after taking out a £30,000 lump sum with an interest rate of 4%, the interest would be £1,200. This is added to your initial cash amount, so your balance at the start of the second year would be £31,200. You do have the option of paying the interest on a monthly basis to stop the interest payments from rolling up

The loan and interest are repaid, usually from the sale of your home, when you die or need to go into long-term care.

WILL YOU RECEIVE YOUR MONEY ALL AT ONCE?

You can choose either to receive a one-off lump sum payment, or choose to receive a smaller lump sum and set up a cash reserve to draw from when you wish.

Whether you’re paying the deposit for a loved one’s first home, helping with your grandchildren’s tuition fees, or just treating yourself to a few of life’s little luxuries, you can take the money in the way that suits you best.

REMEMBER ...

Taking out any form of equity release will reduce the amount of inheritance you can leave behind. It may also affect your tax position and eligibility for welfare benefits.