Home Equity Release is a means of retaining use of your house or other object which has capital value, while also obtaining a lump sum or a steady stream of income, using the value of the house
The “catch” is that the income-provider must be repaid at a later stage, usually when you die. Thus home equity release is particularly useful for elderly persons who do not intend or are not able to leave a large estate for their heirs when they die
A lifetime mortgage is a special type of loan for people usually aged over 55, which allows them to release equity from their home by means of a secured loan, and only requires paying back (together with any interest rolled up if applicable) once the property is sold on their (or in the case of joint applications – their surviving partner’s) death or permanently moving into care.
As opposed to a home reversion plan, a lifetime mortgage does not involve you in selling any legal ownership in return for money raised and allows you to remain living in the property for the rest of your life.
The debt is only repaid when the property is sold. As no ownership of the property is lost under a lifetime mortgage, the property is sold when required by you or your family, the debt paid off and any balance would be retained by you or your personal representative.
Home Reversion Plan
A home reversion scheme allows you to sell part or all of your property to a provider in return for either a lump sum or income and a lifetime right to remain living in your property. Your home, or the part of it you sell, will then belong to someone else, but you are allowed to carry on living in it until you die or move out and you or your estate will retain the value of any share not sold.
Whilst under these schemes you sell the ownership, you will still be responsible for the property and bills relating to it.You can sell up to 100% of the value of your property but will only receive a heavily discounted sum of money which could be as low as 25% of the current market value at age 65 which is typically the minimum age for home reversion plans.
For more information on home equity release either fill out an enquiry form or call us today on, 0151 735 1000 and ask to speak to a member of the Private Client department.
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