What Are My Options?

If having sought our independent advice we decide that using the equity tied up in your property is the best option for you, you have a choice of ways to release the equity. Selecting the right Plan depends on many factors such as your age, the type of property you own and how much capital you want to release. This is why it is important to seek financial advice before making a decision.

The Two Main Options for releasing equity are…

Lifetime Mortgages

With a lifetime mortgage you take out a loan against the value of your home. The lender gives you a lump sum, a monthly income or a combination of the two.

Unlike a normal mortgage however, you do not make any payments on some lifetime mortgages until the property is sold. Instead the interest on the loan is added to the total owing. Because interest is rolled up in this way, the amount you will need to pay back when the property is sold can grow quickly. Alternatively you can elect to pay interest and the debt will remain the same.

Of course, the value of your property could go up even faster than the amount you owe. This could reduce or even eliminate the effect of rolled up interest on the amount of equity you have in your property in the future. Conversely, if property values fall, interest will erode the equity in the property much more quickly. Never forget that there is no guarantee that property values will rise in the future. If you live in your property for some time after the plan is taken out, or if property values fall, it is possible that you will have no equity in your home, and therefore nothing for your beneficiaries to inherit.

This Website refers to Home Reversion Schemes and Lifetime Mortgages. To understand the features and risks, ask for a personalised illustration.

For your added peace of mind, the Financial Services Authority now regulates the advice and marketing of Lifetime Mortgages

For details of how we can be paid, please see our How Much is it page.

How Lifetime Mortgages Work

• You take out a loan against the value of your home.

Home Reversion Plans

With this Plan, you sell your home – or more usually a part of it – to a private company called a ‘reversion company’. You do not, however, receive the full market value as you would if you sold your home on the open market. Instead, the reversion company gives you the right to live in your home rent-free for the rest of your life.

Depending on factors such as your age and the value of your property, you may only receive 35% or even less of the market value of your home – and you will rarely receive over 60%. When your home is sold, the reversion company receives a pro-rata share of the proceeds of the sale. If you sold a 50% share of your home to the reversion company, it will receive 50% of the proceeds. These plans are only available if you are over 65.

How Home Reversion Plans Work

• You sell a share of your home to a reversion company

• You receive a lump sum or regular income

• You do not have to pay any rent to live in your own home, even though you no longer own all of it

• When your home is sold, the reversion company receives the agreed percentage of the sale price of your home