Equity release schemes allow you to take the equity in your home (which is defined as the open market value of the property minus any mortgage or other debt secured on it) and release it in the form of cash.

In this way, equity release can let you make use of the value (equity) in your property without having to sell up and move house.

There are two different types of equity release plan. They are know as lifetime mortgages and home reversion schemes.

We will talk about each type in more detail in a moment. But whichever type of equity release scheme you choose, there are certain requirements that have to be met and certain features which are common to both types of equity release arrangement.

These key features of all equity release schemes are:

• you can use equity release to obtain a cash lump sum, a regular income or a combination of the two, depending on what suits you best
• you can continue to live in your home for as long as you like
• you continue to be responsible for the repair and upkeep of your home
• to be eligible for equity release you have to own your own home
• you also have to be over a certain age - with most equity release providers you typically have to be aged over 55

Lifetime Mortgages

With this type of equity release plan you are taking out a loan (or mortgage) which is secured against your home. Because it is a secured loan, that means that the lender has the security of knowing they can get their money back by selling your home when the time comes for the loan to be repaid.

You receive this loan in the form of a cash lump sum or as a regular monthly income or as a combination of the two (part lump sum and part monthly income).

You continue to own your property and can carry on living in it for as long as you like.

Interest is chargeable on the loan but you do not have to repay anything (capital or interest) whilst you remain living in your home.

Once the time comes when you and your spouse/partner have both died or moved into long-term care and so no longer need the property, your house is sold and the proceeds are used to repay both the original loan amount plus the interest that has accrued since.

Anything which is left over, after costs, then passes into your or your partner's estate.

Home Reversion Schemes

With a home reversion plan you actually sell some or all of your home to a home reversion company or an individual. The price which is paid will normally be less than the open market value of the property, because the buyer has to agree not to sell your home until such time as you die or decide to move out.

You can usually choose to receive the sale proceeds in the form of a cash lump sum or as a regular monthly income or as a combination of the two (part lump sum and part monthly income).

Meanwhile, an agreement is drawn up which means that you can continue to live in your home for as long as you like, as a tenant of the company or individual who is buying your house from you through the home reversion scheme.

This means you get the cash that you need without having to actually move home.

Once you and your partner have died or moved into long-term care, your house is sold and the proceeds are split between the home reversion company and your or your partner's estate.

To find out more about lifetime mortgages or home reversion schemes and how they could help you lead a more comfortable retirement, please complete our enquiry form and we will arrange for one of the qualified equity release specialists that we work with to contact you free of charge for a no-obligation discussion in strictest confidence.