AGA Mortgages - Free independent UK mortgage advice

Equity Release

WHAT IS EQUITY RELEASE?

Your equity is the value of your home minus any outstanding mortgage on your property. Equity release is when you are able to turn some of that equity into cash to use now. These schemes are available to people over the age of 55 years.

There are two main types of equity release scheme both with their advantages and disadvantages. We would advise that you contact us to discuss these fully

Lifetime Mortgages - This is where you can borrow an agreed amount of money against the value of your home in the form of a mortgage. This is usually one lump sum, although you can take it out as you need it.

Once any outstanding mortgage is settled first, you can spend the money you release as you wish. The best way to visualise it is to think of it as a long-term loan, secured against the value of your property, which is paid off when your home is sold.

You can continue to live in your home and have no interest to pay at all during your lifetime. Instead, "compound interest" is added or "rolled up" with the loan. The whole debt is then paid off using the proceeds from the sale of the property when the last survivor dies, or moves into a nursing home.

Home Reversions - This is where you sell your home, or part of it to a reversion company. In return you will then receive a lump sum or a monthly income (or a combination of both).

You have the right to continue living in your home for the rest of your life but technically you become a tenant. The property will eventually be sold (usually when you die) and the reversion company takes their share of the proceeds. This will be calculated on the percentage of what you sold them plus any growth.

The reversion company will only pay you a percentage of the current market value for the share of the property it buys. This is because you can carry on living in the property until you die and they may have to wait years for its return.

How much can I borrow? - With a Lifetime mortgage, the amount you can borrow depends on your age (or the age of the youngest applicant) and the value of your property. To discuss actual figures please don’t hesitate to contact us.