When people talk about Equity release often, they are referring to a range of products letting you access the equity (which is the cash) that is tied up in your home. If you are over the age of 55, then you can take the money our of your home. You have the choice of being able to release the equity as a lump sum or, in several smaller amounts or as a combination of both. Equity release options are known as a Lifetime mortgages.
A common question or misconception people seem to have is that they will need to pay rent to the equity release provider. For lifetime mortgages, you may be able to choose whether to pay back interest or let it build up. The loan is usually only paid back when you die or if you need to sell the property to pay care fee’s, then on the sale of the property you will have to pay back the debt.
One of the big advantages of using equity release is to have the ability to pay off your mortgage if this is still outstanding. You can use equity release to reduce your monthly payments or even bring them to zero.
However, it’s important to note that if you are hoping to leave property to the next generation, equity release could eat into their inheritance. It’s important to seek professional advice before entering into any equity release product.