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Equity Release 

WHAT IS EQUITY RELEASE? 
 
Equity Release is the amount of equity available in your home. Equity release is calculated based on your property value and the youngest age. You qualify for equity release if you are a homeowner aged 55 and over with a minimum property value of £70,000. Any existing mortgage/secured lending would need to be repaid as a condition of equity release. 
 
The money released from your property is tax free cash because it is the equity in your property which is being released. Equity release may used as a suitable option to plan retirement. 
TYPES OF PLAN 
A LIFETIME MORTGAGE 
 
A lifetime mortgage or a roll up lifetime mortgage is a loan secured against your property. You do not make any monthly mortgage payments. The money borrowed is repaid on the sale of your property plus the interest which has accrued over the lifetime of the plan. If the plan is in joint names, the plan is repaid on the death of the last survivor and the remaining equity passes into your estate. 
 
You retain full ownership of your property therefore your name will remain on the deeds to your property. The minimum release amount is £10,000. The interest rate is generally a fixed interest rate for the lifetime of the plan. 
DRAWDOWN LIFETIME MORTGAGE 
 
A drawdown lifetime mortgage is a secured loan against your property. It works exactly the same way as a lifetime mortgage except you have the ability to drawdown funds when and as required. The typical minimum release is £10,000 with an available drawdown facility set by the plan provider. 
 
The main advantage of a drawdown lifetime mortgage is that you are only borrowing money when and as needed and you are only being charged interest on the money borrowed at that time. This can help reduce the amount of interest charged over the lifetime of the plan. 
 
When you drawdown further money you are then charged interest at the prevailing rate at that time. Should you decide not to draw from the drawdown facility you will not be charged interest on the amount not used. 
INTEREST LIFETIME MORTGAGE 
 
An interest only lifetime mortgage is a loan secured against your property. An interest only lifetime mortgage is offered at a fixed interest rate for the lifetime of the plan and you make interest only payments on the money which you have borrowed. The capital amount which you have borrowed remains level throughout the lifetime of the plan. On eventual sale of the property, the capital amount is simply repaid and the remaining equity in the property passes into your estate. You retain full ownership of your property. 
PART INTEREST ONLY PART ROLL UP LIFETIME MORTGAGE 
 
A part interest only, part roll up lifetime mortgage is a secured loan against your property. This is a combination of both an interest only lifetime mortgage and a roll up lifetime mortgage. You can decide to have a set amount on a roll up lifetime mortgage and decide on how much you could afford to pay on the interest only part with a minimum initial payment of interest of £25 each month. This may be a benefit to you should the full interest only payments be unaffordable or you wish to help reduce the amount of interest which will be owed on sale of your property. 
HOME REVERSION PLANS 
 
A Home Reversion scheme is where you sell part or full ownership of your property in exchange for a cash lump sum amount. You do not pay any monthly payments and there is no interest accrued on your property. On the eventual sale of the property your property will either revert to the plan provider or if you have sold an initial percentage the remaining percentage will be left as a guaranteed inheritance of the future property value. 
 
The minimum age to qualify for a home reversion plan is 65. 
POPULAR REASONS FOR EQUITY RELEASE 
Repay an existing mortgage 
 
Debt consolidation – repay credit cards, loans 
 
Repay Debt Management 
 
Repay secured loans 
 
Home improvements 
 
Financial help to family 
 
New car purchase/motor home/static caravan 
Divorce/settlement purposes 
 
Lifestyle funding 
 
Create an emergency fund 
 
Surgery 
 
Buy a new house 
 
Pay off a 2nd properties mortgage 
 
In house care costs 
Repay loans to friends 
 
Buy a 2nd property 
 
Holidays/travel/cruises 
 
If you feel this is an option for you then we can help. 
 
Our Associate Partner is fully accredited in Equity Release and is a specialist in this field. Call us today to arrange a no obligation consultation. 
 
 
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