Equity Release Schemes for Retirees.

An equity release scheme is simply a way to release cash locked up in your home. Available to homeowners aged 55-95, an equity release scheme can be made available to your during your retirement years so that you can enjoy your retirement to the full.
If this is something that you are considering then it is advised you receive independent advice from an equity release comparison company. Using an independent adviser allows you to search the entire market to find the best equity release scheme to suit you.

With an equity release scheme you can release cash from your home without the worry of the monthly repayments. There is a lot to consider with equity release before you go ahead and sign on the dotted line. You can receive a rough guide of how much you could potentially release from your home via an equity release calculator.

Here is a brief overview of the schemes.

Lifetime Mortgages: This type of plan allows you to borrow money from the provider and the loan is secured against your home. You can remain in the home and remain the legal owner for as long as you wish. No repayments are needed to be made. The provider takes a percentage, which is a fixed rate, when the property is sold. This is usually when you die or if you move into long term care.

Home Reversion Plans: A home reversion plan simply means selling all or part of your home in return for a cash lump sum or income. When the plan ends, most often when you die or move into long term care, the reversion company sells the property, takes its cut and pays what is left, providing you didn’t sell 100 per cent of your estate. Until then you can live in your home for rent free. Because you are not paying significant rent the reversion company does not give you the full market value for the part you sell. For example, if you sold the whole property, you would typically receive 35-65 per cent of its value, dependent on your age. If you wish to buy it back you will need to pay the full market value of that portion.

Drawdown Lifetime Mortgages: Drawdown lifetime mortgages are more flexible for people looking to release money from their homes. Instead of taking out a lump sum up front when you start the plan, you agree a total loan amount with the lender but take the cash as and when you need it. After the initial loan amount, there is usually a minimum instalment, you have to take. In most cases this is £2,000-£5,000. The advantage of this is that you only pay interest on the money you take rather than on a whole lump sum. It also removes the hassle of having to go through the process again if you decide to take more money out instead of paying all the costs involved a second time.