Equity Release Scheme-Types

Equity release products are essentially way in which to get a loan that you receive against your property. With equity release schemes, you do not have to repay your loan as you may be used to with standard bank loans, as the amount owed is recovered by the equity release provider when your house is sold in the event of your death, or when you move into a care home.browse this site.

There are 3 basic forms of equity release scheme on the market in the UK. These all have their own advantages and disadvantages, and they may not be beneficial for each and every home owner. The individual pros and cons of each have to be carefully weighed up before you decide to sign up to such scheme.

Lifetime mortgage equity release schemes

Releasing equity using this method enable you to acquire a tax free cash lump sum against the value of your property. Unlike standard loans, you do not have any repayments to make. When you die, your home is sold. The proceeds from this sale are then given to the release provider to pay back the full loan amount owed as well as the interest owed on the loan.

Draw down lifetime mortgage equity release

A draw down lifetime mortgage release scheme is similar to a lifetime mortgage. However, with draw down lifetime mortgages, you can access the loan a little at a time. Instead of being paid a one off lump sum, you are allowed to withdraw the money that you want over time, as and when it is needed. Withdrawing smaller sums means being able to pay back reduced interest payments. Also, if you receive state benefits, acquiring smaller sums may help to limit the effect that these might make on your benefit entitlements.

Home reversion plan equity release

Home reversion plan equity release products are a type of product that allows you to protect a portion of your property, so that you can provide an inheritance to members of your family when your house is sold upon your passing away. In terms of a home reversion plan, you give the legal ownership of your home to the release provider in exchange for a lifetime lease agreement. A lifetime lease gives you the legal right to remain in your property until you pass on, without paying rent. When it comes to home reversion release schemes the difference is that you are allowed to sell all or just a percentage of your home to the lender.