House equity release is where you use the equity in your property to provide a lump sum and/or regular income. All house equity release schemes work on the same principle: they lend you a part of your home’s value in return for a share of the proceeds when you die.
House Equity release plans – are also called lifetime mortgages, home reversion or home income plans – they allow you to release cash to spend as you wish, whether to buy that new car, to pay for a holiday or home improvements, or simply to make daily life more comfortable.
How do house equity release schemes work
These schemes essentially allow you to borrow money against the value of your home, with the debt being repaid from the sale proceeds after your death. Many retirees only have a small pension and virtually no savings but live in properties which in most cases have no or very small mortgages on them.
The average house price in England and Wales is now standing at £164,455 (February 2010, see www.landreg.gov.uk/houseprices/).
House Equity Release Step by step guide
- Age Concern and the Financial Services Authority, the UK’s chief financial watchdog, both recommend getting independent financial advice before proceeding with house equity release.
- An Independent Financial Adviser (IFA) will look at your overall finances to see if equity release is really the best option for you, help find the right type of scheme – bearing in mind that in some cases you could risk losing state benefits and may have to pay extra tax.
If you are considering house equity release then you can download this free step by step guide from the Consumer Financial Education Body.
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