There are two main types of equity release products as can be seen below:
1. LIFETIME MORTGAGE
A liftime mortgage is a type of equity release that allows you to borrow a certain amount of money against the value of your house. This equity release borrowing can be in the form of a lump sum or you can take regular 'draw down' amounts as and when you need it. When it comes to retirement, this type of equity release allows you some flexibility that suits your long term income and lifestyle needs, as well as one off expenditures such as repaying an existing mortgage, home improvements, special purchase or gifts to the family. That is why many equity release products have a range of flexible options such as further advance, regular draw down and ad hoc repayments as well as monthly repayments (in the form of interest only). Equity release products can also offer protecting a proportion of the property for inheritance purposes.
2. HOME REVERSION PLAN
Home Reversion is a type of equity release plan that allows you to access part of the value of your home whilst retaining the right to remain living there, rent free, for the rest of your life. This type of equity release involves an investor purchasing all or part of you home taking into account your age and health and providing you with a tax free cash lump sum or regular payments and a lifetime lease, guaranteeing the right to stay living in the property for the rest of you life.
Home Reversion equity release has no day to day interference and no restrictions on treating the house exactly as before as a private home to live in freely. The percentage they retain will always remain the same, regardless of the change in property value unless you take further cash releases. At the end of the equity release plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.
With a Home Reversion Equity Release Plan, it is possible to give you certainty in your future finances. With a Home Reversion Equity Release Plan, you know precesely what tyoyu are parted with and what has been ring fenced for later use, plessibly to leave in a will.