Retaining ownership with Equity Release

“Will I still own my home?” is a frequently asked question by people considering Equity Release in the UK. When making such a significant financial decision, it is essential to understand the facts about ownership and Equity Release, as the answer to the question depends on which plan you choose.

Lifetime Mortgages - offer the most popular form of Equity Release in the UK. They enable homeowners aged 55 and over to release money from their homes with an interest-only mortgage. Like a traditional mortgage, the lender places a charge against the property, but you remain the legal owner of your home.

Confusion often arises because of the alternative Home Reversion Plan option. With this form of Equity Release, the homeowner sells a share or all of their property to a provider, in return for a lump sum or instalment payments. In this case, you would no longer legally own all or part of the property, but you have the right to remain living in your home rent-free for the rest of your life.

This distinction is why most people opt for a lifetime mortgage, as it allows them to access funds while keeping full ownership of their home.

How does a Lifetime Mortgage work?

Lifetime Mortgages enable you to borrow money against the value of your home. The key characteristics are:

• No monthly repayments are required - The loan plus interest is repaid when you sell the home, move into long-term care, or pass away.

• You retain 100% ownership - The homeowner retains ownership and can continue living there for the rest of their life.

• Interest roll-up or repayment options - Some plans allow you to make monthly interest payments to prevent the interest accumulating and the loan from growing too large.

• Guaranteed no negative equity - The Equity Release Council's safeguards ensure that you’ll never owe more than the value of your property.

Who is eligible?

• To qualify for a Lifetime Mortgage, you must be aged 55 or older.

• You must own a property that meets minimum lender requirements.

• You should be looking for a way to unlock equity in your home without needing to sell or move.

What are the main benefits of Equity Release?

• You can release tax-free money from your home to enjoy in your retirement, as you wish.

• Unless you choose a plan that allows voluntary payments, monthly repayments are not compulsory.

• With a Lifetime Mortgage, you retain full homeownership.

• There is no need to move away from the town and home that you love.

What else should you consider?

• If unpaid, the interest will compound so the debt can accumulate significantly over time.

• The loan is repaid from the sale of your home which could impact your family’s inheritance.

• Some plans charge early repayment fees, should you decide to repay the loan early.

• Access to equity release may impact your eligibility for means-tested benefits.

Is Equity Release Right for You?

Equity release can be a valuable financial solution for those looking to improve their retirement lifestyle. However, everyone is different, and it is important to understand how it works. It is essential to seek financial advice to help you make an informed choice that aligns with your goals and financial security.