Equity release is a way to unlock the value of the property you own and turn it into a cash lump sum without having to sell up and downsize. You can do this through a range of different plans.
You can take the money you release in one lump sum, in several smaller amounts, and spend the money as you please.
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Equity release will affect potential inheritance and your entitlement to means-tested benefits both now and in the future.
Equity release will be secured against your property
This is the most popular option where you release a tax-free lump sum from your home. You continue to own your home, but interest is applied on the loan and will need to be repaid after your death or if you go into long term care.
Interest Only Lifetime Mortgage
This type of plan is just like a normal Lifetime Mortgage, where you get a tax-free lump sum and continue to own your home. However, with an Interest Only Lifetime Mortgage you have the freedom to make repayments to the plan. This will help lower the effect of the interest on the loan taken out.
Drawdown Lifetime Mortgage
Just like the Lifetime Mortgage, you continue to own your home after you release money. However, here you have a little more flexibility, you can release money over time as and when you need it, instead of in one big lump sum.
Home Reversion Plan
You give up the ownership of some of your property for a tax-free lump sum. You must be age 65 or over to take out this kind of plan. You still get to stay in your property, and you do not have to pay any rent to the lender.