Equity Release

Equity release schemes allow you to release equity from your home without moving house. During the housing boom equity release schemes became very popular, as people made a lot more money from their homes than savings accounts or other investments. Equity release schemes tend to be most popular amongst retired people and can be used to boost weekly income, in addition to pension payments or savings. The participant receives a lump sum or monthly payments in return for the provider making money from the home, in the event of the owner going into care or passing away.

What are the benefits of equity release?

Equity release schemes allow you to take money out of the value of your home, which means you can access funds without needing to sell your home or move house. This can be beneficial for people who are happy with where they live and want to use the money tied up in their home to live on. Equity release is most popular with people who are retired and can make retirement much more comfortable, as pension payouts are often not sufficient to cover all household costs and non-essential items. Equity release policies enable policy holders to live in their home until they pass away or go into long-term care. This is a great source of peace of mind for those who are worried about their income during their retirement, since it means they do not have to go through the upheaval of moving home to profit from the value of their house.

Who can benefit from equity release?

Most companies offering equity release schemes have minimum requirements. Most policies are open to people aged between 55 and 70 with a property that is worth at least £30,000 to £50,000, though some policies may be open to people up to the age of 90. Equity release can be beneficial, but it is wise to do your research and speak to a financial adviser before you decide to go ahead. Equity release is a big decision and ideally you should discuss the matter with family members before you join an equity release scheme. If you receive benefits it may not be advisable to participate in an equity release scheme, since the income you earn from the scheme may cancel out the payments you are entitled to from the state. It is important that to check this out and discuss your options with a financial expert prior to signing to a scheme.

Types of equity release

There are different policies and equity release schemes available, including home reversion plans, lifetime mortgage and home income plans. Equity release can be complex, especially if you do not have in-depth knowledge about financial services or products, so it is always a good idea to discuss your plans with an independent financial adviser before you decide to join an equity release scheme.