There are several different types of equity release schemes that allow you to release cash from your home. It is very important to understand how equity release works before considering it as an option.
One common type of equity release is the lifetime mortgage which allows you to take a loan against the value of your property. This loan entitles you to a cash lump sum which you can use to finance your needs. The interest and the loan total are only repaid when the property is sold. This normally occurs upon your death or the death of your partner.
A similar equity release scheme to the lifetime mortgage is the draw down lifetime mortgage. The difference between the draw down lifetime mortgage and the lifetime mortgage is that with the draw down lifetime mortgage, you only receive the cash when you need it instead of receiving a lump sum cash amount.
Another type of equity release scheme is the interest only lifetime mortgage which is a lifetime mortgage on your property but allows you to repay the interest on a monthly basis. The advantage of this equity release scheme is that it reduces the amount that needs to be paid back when the property is sold.
The home reversion equity release plan is quite different from the three equity release schemes mentioned above in that it allows you to sell all or a part of your property for a cash lump sum with the added benefit of being able to stay in your property until your death.
Some equity release schemes offer you more money based on your health and lifestyle. The poorer your health, the more money you can be offered by equity release scheme providers. You are free to use the money you receive from equity release schemes to meet the needs of your choice. There are no limitations or restrictions.
In order to choose the scheme that will be able to meet your needs, you will need advice from an equity release specialist who will be able to assist you in choosing the best scheme with the most benefits.
