Owning your own home is a great joy for many, but it does come with its responsibilities. Over time, your home will not only need general maintenance work, but you may find you want to make changes and improvements.
For homeowners who are coming to the end of their mortgages, or have indeed cleared them, equity release is a fantastic way to raise some funds for their much desired improvements.
Whether you want new PVC windows and external doors or just to have a bit of landscaping done in your garden – let us tell us what your options are for equity release.
The most popular way of releasing equity is to take out a lifetime mortgage. This an option for homeowners aged 55 and over. Typically, you can borrow up to 60% of your home’s value and release the money as a large lump sum or as several smaller instalments.
With a lifetime mortgage, interest is charged on the amount you’ve borrowed, just like with a normal mortgage, but unlike a normal mortgage you can opt not to repay in monthly instalments and allow the interest to be added to the loan. The loan amount plus the interest that has been added is repaid when the house is sold either after you die or because you’ve moved into long-term residential care.
This option is available to you if you are at least 60 or 65. You sell part or all of your home to a provider in return for a cash lump sum and have the right to carry on living in your home rent-free until your die. You don’t have to pay interest with home reversion but you only normally get between 20% and 60% of the market value of the portion you’ve sold to the home reversion provider. So if your home is worth £200,000 and you sell half of it, you’ll get between £20,000 and £60,000. The older you are the more money you’ll receive.
Give us a call to talk some more about which option might be right for you. We can offer independent financial advice and can search the whole market. We also have advisors with specialist equity release qualifications.