An Equity Release Lifetime Mortgage is the most common vehicle that companies use to facilitate equity release. When a homeowner decides to proceed with equity release, they complete an application for a lifetime mortgage. This works by taking out a long term loan, which is secured on the value of your property.

The details regarding how much you can borrow, are directly related to the value of the property and the homeowner’s age at the time of the application. There will also be further variations depending on the current health and lifestyle choices of the homeowner.

The loan works in a similar way to a standard mortgage except that there are no repayments made during their lifetime. Every year interest is added to the original loan plus the interest that has accrued from previous years. Upon the death of the homeowners or should they move out of the property into a nursing home, the property is sold, and the current debt repaid. Any money that is left belongs to the estate of the borrower.

This type of equity release plan will affect the value of the estate, and there may also be tax implications, so it is important to understand the product you are purchasing.

The ‘tax free‘ cash you can free-up from your property, depends upon three main factors. Your age, the value of your property and for a few lenders, any underlying qualifying medical conditions you may have. Your Lifestyle choices are also taken into account. A few examples are, your height, weight and whether or not you are a smoker. Generally you can release up to 55% of the value of your home. You can choose whether to release this as an initial lump sum, or in stages in the form of a smaller lump sum plus a reserve facility to help achieve your objectives.

The cash released is TAX FREE! It can be spent on anything you wish. However, if you already have a mortgage or a secured loan on your property, this must be cleared first. Any remaining balance from your Equity Release after clearing any secured debts will be yours to do as you please. The simplest way to find out how much cash you could release for your unique, individual circumstances is to use our free, easy to use Equity Release Calculator at the top of this page.

When you sign the contract, you are simply agreeing to another style of mortgage, so the ownership of the property remains with you.

No. For your continued peace of mind, Equity Release lenders approved by the Equity Release Council offer a ‘no negative equity guarantee’. This means you’ll never owe more than the value of your home once sold, and any shortfall cannot be passed onto your estate or your family.

The interest rates vary depending on your personal circumstances just like any other mortgage product. The difference with a lifetime mortgage and a standard residential mortgage is that with a lifetime mortgage, you don’t have to make any interest payments if you don’t want to.

Equity Release can be and has been used for a variety of different reasons by our clients. From the Lender’s perspective, Equity Release is “To be used for any legal purpose“.

The main equity release uses are:

• • Home Improvements – New kitchen/bathroom maybe an extension or similar.
  • Helping Friends and Family – A deposit for the granddaughter’s first home maybe in order to get her on the property ladder.
  • Holidays – A round the world cruise or a long sunny holiday to the Canaries maybe.

There are other uses for Equity Release and some of our clients have taken advantage of this in the forms of:

• • Buying a rental property – Add an additional income stream to top up the pension
  • Investing into a business – Make an investment for the future that could pay off big.