Equity Release

Equity Release is an option for those over the age of 55.

Equity Release

Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.

There are two equity release options Lifetime mortgages and Home reversion.

Equity release can be very useful in some circumstances but it is essential to seek advice on whether it is suitable for you. Please get in touch if you are considering an Equity Release scheme . OM Financial are experts in this market and will make sure you receive the right advice.

Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits.

Lifetime Mortgages

A lifetime mortgage is a type of equity release. You borrow a set amount of money and use your property as security. Unlike a mortgage you do not need to pay back the loan and can choose to let the interest ‘roll up’ over time. This means the interest is added to your original loan and your debt will increase over time. Some lifetime mortgages will now allow you to pay some or all of the interest. Other plans permit penalty free partial repayments up to usually 10% annually which can include both interest and capital.

When you die or go into long term care the loan needs to be repaid including the interest. This is usually done through the sale of the property.

Home Reversion

This is a referral service

Home Reversion plans allow you to sell your property or a share of your property to an equity release provider. This can be received as a lump sum payment or a regular payment. You continue to live in the property rent-free but must agree to insure and maintain it. You will receive a percentage of the property’s value you are selling; this can be between 20% and 60% depending on your age.

Home reversion plans are also available with fixed or escalating rent options. The amount of rent paid will determine the amount of cash released and vice versa. However, rental options fall outside Equity Release Council standards because of the risk of losing your home if rental payments are not kept up.