Equity release is the umbrella name for products that provide consumers with a way of releasing the wealth tied up in their property, without necessarily having to sell it and move to another home. There are two main types of equity release and both are regulated by the Financial Conduct Authority.

Lifetime Mortgages

The most popular type of equity release is a lifetime mortgage. When customers take out a lifetime mortgage, they retain full ownership of their home and any interest on the loan can be paid as you go along or rolled up with nothing to pay until the end. The loan and any outstanding interest are then repaid by your estate when you either die or move to permanent long-term care (or in the case of a couple the last person living in the home). The amount available to borrow depends on things like a customer’s age, their health and how much their property is worth. Lifetime mortgages are usually only available to people aged 55 and over.

Home Reversion Plans

When a customer takes out a home reversion plan, they sell all or part of their home in exchange for a lump sum or a regular monthly income, while retaining the right to remain in it, typically rent free.

You will know precisely what portion of your property you have parted with and, equally, what has been ring-fenced for later use, if that is what you have decided to do, possibly to leave in a will.

The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold, and the sale proceeds are shared according to the remaining proportions of ownership.

Much like a lifetime mortgage, the amount of money a customer can raise depends on things like a customer’s age, their health and how much their property is worth. Home reversion plans are usually only available to people aged 60 and over.

For more information you can visit the dedicated FAQ section on the Council’s website.

It is important to take professional advice before making any decision relating to your personal finances. Information within this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.

Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits.

Tax and Estate planning are not regulated by the Financial Conduct Authority

The value of pensions and investments can fall as well as rise. You may get back less than you invested.

Will writing is not regulated by the Financial Conduct Authority. 

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