There are now almost 700 plans available to choose from, up from just 88 five years ago, and average interest rates are at an all-time low.
Equity release helps homeowners aged 55 or over unlock the tax-free cash tied up in their homes, from a minimum of £10,000 up to 58 percent of the value of their property. Following a rise in popularity over the last decade, borrowers are now benefiting from more choice of plans and flexibility in equity release products as the market becomes more competitive.
Equity release plan options
There are plans that allow you to release your money on a monthly basis, a bit like receiving a salary in your bank each month. Alternatively, you can release a lump sum and then additional smaller amounts as and when you need the money.
You can choose to make regular repayments
In the past, equity release products would roll up the interest and loan and they would only be repaid once you move into care or by your estate when you die. Borrowers can now make voluntary or partial repayments, typically up to 10 percent of the remaining value each year, meaning the amount of interest and the overall debt owed is reduced.
No monthly repayments
One of the main reasons that people decide to release equity is that there are no requirements to make monthly repayments if you choose not to.
What’s more, with a lifetime mortgage, you continue to own 100 percent of your home and you can enjoy spending the money once you have paid off any existing mortgage you may have.
Early repayment charges are more manageable
Equity release plans used to have steep early repayment charges (ERCs) of up to 25 percent of the amount borrowed. Nowadays, most offer defined ERCs that typically decrease on a sliding scale, for example by 10 percent in the first year and nine percent in the second.
Moving home is possible
You no longer have to stay in the property you took an equity release plan out on if you want to move. Equity release plans now offer a portability option to transfer the loan to a new property if it fits a lender’s criteria.
In order to release equity, the youngest homeowner must be at least 55 years of age and your home must be worth. “Brinkwire Summary News”.