Around 270,000 households have benefitted from equity release over the last 20 years, raising more than £12 billion in the process. With more and more people now considering this radical approach, Acumen talks you through your options.
Deciding on which equity release scheme is suitable for you can be complex and there are some associated risks to consider, which is why you should always seek financial advice from one of Acumen’s financial advisers before making your decision.
Here we’ll discuss the various types of equity release scheme, as well as their advantages and disadvantages.
Different types of equity release schemes
There are two main equity schemes available to you:
Lifetime Mortgages – With this type of equity release scheme you are not required to make any repayments over the life of the loan. Instead, interest is gradually added until repayment is taken at the end of your life or if you move to long-term care. You maintain ownership of your home and benefit from any future house price growth.
Home Reversion Plans – With this type of equity release scheme the provider buys a share of your property. When your home is sold, they then receive a share of the proceeds. You will always own your share of the property, which you can pass on to your family. You cannot reverse your decision and you will not benefit from any future house price growth.
What are the advantages of equity release schemes?
- Being able to stay in your home.
- Retaining your independence to make the most of retirement.
- Releasing a cash sum that could make a difference to your retirement.
What are the disadvantages of equity release plans?
- They could affect your family’s inheritance when you die.
- Your future choices in moving home could be limited.
- A change in your circumstances could affect your plan.
- Future borrowing opportunities could be limited.
- You could incur significant early repayment charges.
Are you sure equity release is your only option? Equity release is a lifelong commitment, one that Acumen only recommends after you’ve exhausted all other options. You should always consider alternative options before equity release, such as:
- Ensuring that you are claiming all benefits and grants entitlements.
- Moving to a smaller property to release funds.
- Seeking assistance from your family.
To discuss your equity release plans with one of our dedicated team please contact us today on 0151 520 4353 or email [email protected].