A more mature couple looking to release some of the capital tied up in their property.

Equity Release Mortgages

Equity Release Mortgage schemes allow you to utilise the equity you have built up in your home. There are essentially 3 types of equity release scheme available at present, however the schemes are improving all the time:

  1. Home Reversion - Effectively you sell all or part of your property to a company for a lump sum and have the right to remain in the property until you die. When you die the property or part of the property reverts to the company.
  2. Lifetime Mortgage - Often referred to as a “Roll-up Mortgage”, you receive a lump sum payment for which there is interest payable, however this interest is added to the sum released, so that you don’t have to pay it on a monthly basis. The amount of debt builds up over time as the interest is added to the initial sum, and the final sum, including interest, is cleared when you decide to sell the property.
  3. Interest Only Mortgage - These are ordinary interest only mortgages where you essentially remortgage your property to release a lump sum. You then have to pay the interest on that mortgage on a monthly basis for as long as you have the mortgage. You can then pay off the mortgage at a later stage eg. when you receive a pension payout or if you sell the property.

Over time the flexibility of the Equity Release schemes is increasing, many now allow regular drawdowns rather than a lump sum to allow you to top up your income on a regular basis and only pay interest once the money has been drawn down.

For example:

A lifetime mortgage - release a lump sum of £5,000 to pay for that once in a lifetime world trip, and then release a regularly monthly figure of £500 per month to supplement your pension income. No interest is payable on a monthly basis and as you only release a relatively small lump sum initially and a small amount each month, the interest rolls up much more slowly over time than if you released a large lump sum up front. This leaves more of the equity in place when you do decide to sell.

Get in touch and we can look at all the Equity Release options and advise on the most suitable scheme for you.

To understand the features and risks, ask for a personalised illustration. You should also take advice from your solicitor.

Areas covered include: Wetherby, Tadcaster, Boston Spa, Collingham, Kirk Deighton, Leeds, Harrogate, York...

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