What is an Equity Release Plan?

There are two main types of equity release plan, of which the more popular is the lifetime mortgage and the other is a home reversion plan.

The lifetime mortgage is available to those over the age of 55 and comes at an equity release interest rate of 6.5-7.4%, depending on the lender you choose and how much you want to borrow. A lifetime mortgage is designed to run for your lifetime, but can be paid back early with some lenders having more favourable equity release repayment penalties or charges.

Who Should Take Out An Equity Release Plan?

Equity release is right for those who need to raise some extra capital for either a specific purpose or to generally make ends meet, who want to maintain 100% home ownership and who don't want to pay or can't afford to make any monthly repayments.

There are other ways to raise money from your home, such as downsizing, but many people like the home they live in and have spent lots of money getting it the way they want it. Equity release interest rates reflect the fact there are no monthly repayments and so the lender has to wait for a long and indefinite amount of time before seeing any returns.

What Does SHIP mean?

SHIP are the regulatory body for the equity release industry and make sure all those within it keep to the following promises;

You have the right to use your own solicitor

You have the right to transfer the plan to a suitable property

You have the right to have the plans explained clearly and reasonably

You will never owe more than the value of your home i.e. you will never be in a position of negative equity.