Deciding if Equity Release is for You

More people approaching retirement are turning to equity release mortgages in the UK as a means of maturing their income in later life.

If you own your property and you are over 55 years old, it's possible to turn some of the market price of your property into a large tax-free cash sum or a regular income for the rest of your life.

A lifetime mortgage can change your life for the better but there's also a lot to comprehend and a lot to consider before you make such a decision.

Choosing an UK equity release plan

Equity release in the UK has three main categories. They are Lifetime Mortgages, Drawdown Lifetime Mortgages and Home Reversion Plans.

• Lifetime Mortgage - allows you to release a lump sum from the value of your property, with the amount released plus any interest accrued repaid out of your estate when you pass away or move into long-term care
• Drawdown Lifetime Mortgage - similar to a lifetime mortgage, but with added flexibility, as the cash can be released over time, as and when required, which can reduce the amount of interest accrued.
• Home Reversion Plan - you surrender some or all of the ownership of your property in exchange for a lump sum of money and the right to remain living in the house, rent free, for as long as you live.

Are you eligible for equity release?

You and your partner must be aged 55 or over to qualify for equity release in the UK (60 if you're considering a home reversion plan).

Your property must be worth at the very least £50,000 you must also be able to clear any outstanding credit secured on the property from the equity you release.

General pros and cons of equity release in the UK

Equity release allows you to free up a large sum of tax-free cash to be more comfortable in your later life.

Equity release qualifies you to remain in your own home for the rest of your life if you wish.

There will not be regular repayments to make and you are covered by a 'no negative equity' guarantee.

A home reversion plan can reduce the inheritance tax bill faced by your estate.

Equity release is a big commitment.

Will shrink the inheritance you leave to your loved ones.

Can in some cases effect your entitlement to state benefits

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