Equity Release (option of last resort) Products

Equity Release is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration.

These products enable older homeowners to raise cash for day–to-day living costs by unlocking the capital in their homes.

Older homeowners borrowed £1.1 billion in equity release mortgages during 2008.
(Source: The Times 2008)

Equity release can make a lot of sense for some of these owners, especially if they do not wish to move into a smaller property.

One product involves borrowing against the value of the home, providing either a lump sum or monthly income. Interest is rolled up and added to the total value of the loan, which is not repaid until the homeowner dies or goes into care and the house is sold.

It is recommended that you choose a scheme with a no negative equity guarantee; so that the amount paid back does not end up exceeding the value of the house.

Another option is to sell all or part of their home under a home reversion scheme. The debt is then repaid from the proceeds of the sale of the house.

It is strongly recommended that products be purchased from providers who are members of SHIP, (Safe Homes Income Plan). Founded in 1991, this organisation promotes safe equity release and provides a certificate that must be signed by the client’s independent solicitor.

The amount that can be released is a percentage of the property value. This is dependent on the value of the property and the age of the owner(s). Generally the minimum age of the owner must be 60, but can be as low as age 55.

Released funds can be used to provide extra capital or income, help fund care fees, assist with inheritance tax planning or any number of other concerns.