Equity release schemes are vehicles that enable you to release tax free cash that is locked up within your property, which once received can then be spent as you wish. The various UK equity release plans currently available include both lifetime mortgages and home reversion plans. The lifetime mortgage market can be sub-divided into: –
- Drawdown Lifetime Mortgage
– Roll-up equity release scheme where you are provided with an overall cash reserve facility, but you take only a portion of this initially. Interest is only charged on the money actually withdrawn. Further funds can be taken from the reserve facility at short notice, with no further valuation or set up fees required. Currently the most popular form of equity release scheme.
- Interest Only Lifetime Mortgage
– Rather than interest rolling up & compounding, an interest only lifetime mortgages plan allows you to repay the interest charged. This protects the equity in the property for your beneficiaries & maintains a level balance.
- Enhanced Lifetime Mortgage
– A recent innovation whereby upon calculating the maximum equity release possible, certain lenders will take into account medical history as a factor. Should ill-health have proven to have existed, then an enhanced lump sum can be offered by the equity release provider. This will usually be much higher than the normal maximum equity release lump sum available.
An equity release adviser should always be sourced in order to explain all the available equity release plans in full to help you decide which is best suited to your individual circumstances.