What is equity release?

Equity release describes a range of products only available to you if you are older, typically over the age of 55. They allow you to release the equity (cash) tied up in your home without moving.

The products have no fixed term and allow you to stay in your home for the rest of your life, unless you have to move into long-term care, or if you break the terms of your equity release contract, for example if you let your home fall into disrepair.

Equity release schemes can be helpful in certain circumstances, but are not suitable for everyone. For example, they can be expensive and inflexible if your circumstances change and may affect your entitlement to state or local authority benefits.

Equity release schemes are not the same as sale-and-rent-back schemes, which are very risky and should only be considered as a last resort.

Equity release – How does it work?

You can either borrow money, which is secured against your home (called a lifetime mortgage) or sell part or all of your home (called a home reversion scheme). This can give you a lump sum, a regular income, or both.

You’re more likely to qualify for an equity release scheme if you have no current mortgage, or if any mortgage you have is relatively small.

There may be a minimum amount you have to take. This depends on the scheme and the provider and could be, say, £15,000 or £25,000. But you may not have to take it all at once.

Types of equity release

Equity release schemes are either Lifetime mortgages or Home reversion Plans You’ll need to get information about both so you can decide which one is right for you.

They work differently and are quite complicated, so it’s important to get professional financial advice. Thats why Blue Ocean is qualified to assist you make the right decisions if this is something that you are considering.

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