GUIDE TO EQUITY RELEASE

What is equity release? Equity is the difference between any mortgage you may have and the value of your home. Equity release is a way of unlocking the value of your property, without having to move home. It is used mostly by older homeowners who either have paid off their mortgage altogether or have only a small amount left to pay. You can release the value of your home to give yourself a lump sum or a regular income (or both). If you live in the property until you die, the money from its sale is used to pay the lender before anything left over is paid to your beneficiaries. If you sell the property before you die, you repay the money you borrowed from the lender. With some types of loan you might also have to make regular interest payments.

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The following guide gives some basic information about equity release and tries to answer some of the questions you should ask yourself and your advisers if you are considering this option.

If you are considering equity release you should also get expert financial and legal advice. Equity release can also affect the amount you are able to leave to your family or other beneficiaries after you die, so you may also want to talk through your plans with them.

How can I release the equity in my property?

There are two main ways you can do this.

• Taking out a mortgage
There are special types of loans, usually designed to run for the rest of your life, called lifetime mortgages. You borrow money secured against the value of your home to give you a lump sum or a regular income. The loan is repaid to the lender when your property is sold. You continue to own your home.

• Selling your home (or part of it)
This is normally called a reversion or part reversion scheme. You sell your home, or a part of it, to a reversion company that allows you and your partner to continue to live there for the rest of your lives. After you both die, (or move out for whatever reason) the proportion of your home that you sold becomes the property of the reversion company. Anything left over passes to your estate.

What will it cost?
The costs will depend on the type of plan you choose, its terms and the amount of equity you want to release.

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