Equity Release
More and more people are considering an Equity Release programme to release money locked up in the positive capital invested in their property. Living in a giant house can be less fun when you don’t have a comfortable cashflow situation. There are two basic plans you can get with pros and cons for each:
Lifetime Mortgages - A secured loan of not usually more than a third of the value of the property, interest adds up and is deducted from the value of the property when it is sold on death or when the owners move to a nursing home.
Home Reversion - A less popular option that allows the owners to get a large lump sum and the legal right to occupy a home untill death, at which time the property reverts to the lender.
Recent legislation changed the status of Home Reversion from property sale to lending and as such are now fall under more stringent regulation after claims of mis selling these plans.
Lifetime Mortgages are affected by interets rates and the rise in house prices, with a slow in the rise in house prices and lenders experiencing problems ( and subsequently passing high rates onto borrowers) these may be chosed with care. Home Reversion can result in the lender only paying 30% of the value of the property, so these need to be considered with care.
The offical regulatory and information body is Safe Home Income Plans (SHIP).