Equity Release Lending
If you’re looking to have a more comfortable retirement or to free up funds for another purpose, an equity release loan could radically alter your financial situation. To discover more about equity release and how it could work for you, contact our team today.
What is equity release?
If you are a homeowner aged 55 or over, you may be considering releasing some of your home’s value for tax-free cash (known as equity release). There are two types of product available in Scotland: lifetime mortgages and home reversion schemes. Both options allow you to continue living in your home until you die or move into long-term care, at which point any money borrowed will need to be repaid.
Lifetime mortgages
A lifetime mortgage is a loan fixed against your home that runs for the remainder of your lifetime. One of the benefits of a lifetime mortgage is that you retain ownership of your home.
Previously, repayments could not be made on the mortgage until the borrower died or entered long-term care. As a result, compounding interest could leave far more to repay than had been borrowed. Nowadays, many products offer monthly or flexible repayments. Drawdown mortgages are also available, allowing you to release equity as needed and minimise the interest due.
Home reversion plans
Under a home reversion scheme, you sell part or all of your property to a provider for less than its market value – usually 20-60%. In return, you receive a cash sum, a regular income or both.
While you do not continue to own your home outright, you can remain living in your home as a tenant without paying rent. When your home is sold, the provider receives an amount of the proceeds proportionate to their share of the property.
To take out a home reversion plan, you must be aged 65 and over.
Paris Steele can help you to find an equity release product that works for you, now and in the future. If you’re unsure what is the best option for your circumstances, get in touch with a member of our team today.
How much could I borrow?
How much you can borrow will depend on the product provider. They will consider:
- The age of the youngest owner of the home
- The property value
- The homeowner(s)’ health and lifestyle
Is equity release right for me?
It is important to feel confident in your decision to release equity, and therefore you should always speak to a financial advisor and a specialist solicitor about your options.
In coming to your decision, you should consider:
- Other ways to free equity in your property, such as downsizing
- Whether your benefits, or a future benefits application, would be affected
- Additional costs, like an early exit fee
- Expenses for which you remain liable
- Whether you want to leave an inheritance