They are aimed at people over 55 and allow. Equity release plans allow you to take money from the capital accumulated on your property. They are aimed at older homeowners who would have difficulty taking out a regular mortgage and who are likely to have little or no income to make regular payments. The minimum age is usually 55 for lifetime mortgages and 60 for reversal plans.
Capital release refers to a range of products that allow you to access capital (cash) immobilized in your home if you are older. You can accept the money you release as a lump sum or, in several smaller amounts, or as a combination of both. There are two types of equity release; lifetime mortgages and housing reversal plans. Both are regulated by the Financial Conduct Authority.
By using an equity release product, a homeowner can take out a regular lump sum or smaller sums of the value of their home, while staying in their home. A capital release provider will provide you with a lump sum or income in exchange for a portion of the value of your home. This is achieved through a type of mortgage or by selling that part of your house on the condition that you can continue to live there as long as you want. In short, equity release plans allow homeowners to unlock some of the cash that is currently tied up on their property.
Aimed solely at older homeowners, capital release plans may seem like a good idea for those who need, or want, to raise funds without having to sell their home and move. If you live in a mortgaged property, the equity in it is the difference between the value of your home and the total mortgage and any loans you have insured on it. The release of capital is an agreement that allows you to access the money from this capital without having to leave your home. Usually you must be at least 55 years old.
You may be able to accept the money you release as a lump sum or regular smaller payments, or both. If you use the money you raise from the capital release to settle debts, this may affect your entitlement to benefits. Equity release allows you to access cash held at home if you are 55 or older, without having to sell it. Charges will vary from provider to provider and between advisors, but the total cost of setting up capital release can reach £3,000.
There are a couple of ways that homeowners can access their equity and may still be eligible for an equity release plan even if they have one outstanding mortgage left on their property, although applicants must be 55 or older to qualify. As we mentioned above, to qualify for a capital release plan you will have to own a home in the UK and over 55.Many websites have capital release calculators that ask you to provide your personal details before giving you more information. If you are considering hiring a capital launch product, you should seek financial advice from an independent financial advisor. To obtain a capital release plan, you will need a consultation with a qualified capital release advisor; they will be able to recommend the most suitable plan for you.
If the value of your home has increased over the years, freeing up capital allows you to get some of that money to supplement your retirement income, rather than leaving everything to your beneficiaries or to cover your long-term care costs. Companies that advise and offer capital release plans and that are members of the ERC must follow the FCA rules on capital release. Choose the Right Way to Release Equity for You and Your Family Whether a Lifetime Mortgage or Housing Reversal Plan is in your best interest will depend on a wide range of circumstances, such as how much you expect to leave your family as an inheritance. .