How do equity release schemes work?
There are various different types of equity release schemes although they basically fall into two categories: 1. Home reversion schemes This involves you selling a share of your property for less than the market value. Your home, or part of it, goes to a reversion company which then pays you either a large lump sum upfront or a monthly amount until you either die or move into long-term care. Once this happens the provider will be entitled to its share of the property’s value at the going market rate, and what’s left goes to your estate. The amount you can raise from one of these schemes depends on your and your partner’s age but is usually between 35% and 60% of the market value of the property. 2. Lifetime mortgages Lifetime mortgages allow you to take out a loan on your property in return for a tax-free lump sum, an income or a combination of the two. Much like a standard mortgage, the loan is secured against your property, but you still own it. The difference is, it doesn’t have to
