Types of Equity Release

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Types of Equity Release Schemes

There are two equity release schemes available on the market offered by reputable equity release providers, and they fall into two main categories:

Lifetime Mortgages
Home Reversion Plans

Each type of equity release scheme facilitates a different method of releasing the equity in your home, and there are various other useful features available to create the ideal equity release scheme for you, including:

Protected Equity

Many equity release schemes come with a no negative equity guarantee, and in some cases, there are plans which also enable you to protect a fixed share of the value of your home. For example, if you protected a 30% share in your home, you have a guarantee that a minimum of 30% of your property value is protected for you in later life or as an inheritance for your beneficiaries.

Impaired Life

Some providers will allow you to release more capital from the equity release scheme if you suffer from one of a list of health conditions.

Income

Many equity release schemes allow you to release the equity in the form of an income, by releasing the capital in staged payments over your lifetime.

Flexible Drawdown

There are some equity release schemes available with a pre-agreed 'cash reserve'. Like an overdraft, this is a facility which allows you to draw down cash whenever you wish, so it's ideal for generating funds when required for home improvements, maybe a new car, a special holiday, etc. Interest is only added to the amount drawn, so they can work out much cheaper than other types of equity release schemes, depending on your needs. Flexible Drawdown is a complicated area with both advantages and disadvantages. Please review the dedicated section on this subject within the Equity Release area.

Warning Text

A LIFETIME MORTGAGE WILL REDUCE THE VALUE OF YOUR ESTATE AND MAY AFFECT YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS AND TAX STATUS.

THE IMPACT OF NOT SERVICING MONTHLY INTEREST PAYMENTS ON A LIFETIME MORTGAGE IS THAT THE OUTSTANDING DEBT CAN GROW RAPIDLY, THUS REDUCING THE VALUE OF YOUR ESTATE.

FOR EXAMPLE, IF THE INTEREST RATE WAS 7% A YEAR, A £50,000 LOAN WOULD DOUBLE TO £100,000 AFTER 10 YEARS ASSUMING NO REPAYMENTS ARE MADE.

THIS IS AN EXAMPLE FOR ILLUSTRATIVE PURPOSES ONLY AND PERSONALISED ADVICE AND RECOMMENDATIONS SHOULD BE SOUGHT FROM A QUALIFIED PROFESSIONAL. YOU ARE STRONGLY ADVISED TO REGISTER A LASTING POWER OF ATTORNEY. THIS WILL ALLOW YOUR AFFAIRS TO BE MANAGED BY SOMEBODY ELSE IF YOUR MENTAL ABILITIES SIGNIFICANTLY DECLINE.

EQUITY RELEASE SERVICES ARE REFERRED TO A THIRD PARTY. NEITHER SYNCHRO MORTGAGE SOLUTIONS LTD NOR PRIMIS ARE RESPONSIBLE FOR THE SERVICE RECEIVED. THESE SERVICES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY AND MAY HAVE LIMITED CONSUMER PROTECTION.