Home Equity Release

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Describes products allowing you to withdraw money/equity tied up in your home. Usually claimed once you’re over 55 and is a way of using your home as collateral whilst living in it. Money can be claimed all at once or in instalments, interest is also added.
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Two types of plans:

• Lifetime mortgage: taking a mortgage on the home, while owning it and living there. Loan and interest are paid once you die/move into long term care.
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• Home reversion: Part of your home is sold for a lump sum/regular payments. You live there rent-free till you pass away. At the end, the home is sold, money is shared between the beneficiaries and reversion provider.
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You don’t pay tax on money from equity release, but it will reduce the value of your estate. reducing the inheritance tax owed, but less of the estate goes to them.
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Things to consider:

• Lifetime mortgage is more expensive than regular mortgages.
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• Usually up to 60% of value is released.
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• If you don’t have enough in your estate to cover the loan, once property is sold and fees are paid, neither the estate nor you are liable to pay costs.

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