WHAT IS EQUITY RELEASE?
Equity Release is a way for homeowners aged 55 or older to unlock some of the value tied up in their property. There are two main types of Equity Release products: Lifetime Mortgages and Home Reversion Plans.
These allow you to access funds while continuing to live in your home, though the terms differ significantly between the two.
How Does Equity Release Work?
With Lifetime Mortgages, you can release a portion of your home’s value while retaining ownership. Unlike a traditional mortgage, you typically don’t make monthly repayments. Instead, interest accumulates, and the loan is repaid when the property is sold—usually upon your death or if you move into long-term care.
On the other hand, Home Reversion Plans involve selling part or all of your home to a provider. In exchange, you receive a lump sum or regular payments. However, you no longer own the full property, though you retain the right to live there until the plan ends, typically upon your passing or move to long-term care. When the property is sold, the provider receives their share of the sale proceeds.
Important Considerations
Before committing to Equity Release, it’s essential to weigh the long-term financial implications:
- Reduced Inheritance: Releasing equity reduces the value of your estate, which will impact what you can pass on to your beneficiaries.
- Effect on Benefits: Equity Release may affect your entitlement to means-tested state benefits, such as Pension Credit or Council Tax Support.
- Rising Debt: With Lifetime Mortgages, the interest added to your loan over time can increase the overall amount significantly.
Potential Advantages of Equity Release
While there are important considerations, Equity Release can offer several advantages depending on your personal situation:
- Access to Cash: Free up funds tied up in your home to improve your financial stability in retirement.
- Flexibility: Use the released funds to supplement your income, make home improvements, pay off existing debts, or pursue personal projects.
- Stay in Your Home: With both options, you can continue living in your home for life, though you no longer own it in full under Home Reversion Plans.
Making an Informed Choice
Equity Release is a major financial decision, and it’s crucial to get tailored advice based on your individual needs. At Citrus Financial, we’ll work with you to explore all available options and ensure you fully understand the implications. We’re here to help you decide if Equity Release is right for you and explain the impact it could have on your financial future.
For more information and a free, no-obligation consultation, contact Citrus Financial today and learn how to unlock the value of your home.
Contact Citrus Financial today for a free initial consultation and unlock the potential of your home.
Equity Release (including Lifetime Mortgages and Home Reversion Plans) will reduce the value of your estate and can affect your eligibility for means tested benefits.