Do You Still Own Your Home With Equity Release Plans?

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Written by Daniel Tannenbaum on June 3, 2021

Updated June 28, 2021

Yes, if you take out an equity release plan, you can still maintain ownership of your home. With a lifetime mortgage product, which is the most common type of equity release, you will still retain ownership of your home, flat or property and can continue to live it in until you die or go into long-term care.

With a lifetime mortgage, you are releasing cash from your home (around 20% to 60%) and paying it as though it is a mortgage for the rest of your life or until you or your last surviving partner passes away or goes into care. But rather than paying monthly payments like a regular mortgage, the entire loan plus interest is rolled up and paid to the equity release lender when the plan comes to an end.

By contrast, if you use a home reversion plan, which is the other type of equity release, this is like physically selling out a part of your home and you could sell off 100% of it you want to. So, if you are using home reversion, you will be giving up a percentage of your home or all of it, below market value, and therefore you will lose all or some of the ownership of your home.

To discuss your equity release requirements today, you can get a free and impartial quote from Lending Expert here >>

 

Key Points:

  • Using equity release means that you can still be the owner of your home
  • With a lifetime mortgage, you maintain ownership of your home
  • With home reversion, you are selling off part or all of your home and giving up some ownership
  • With over 100 types of equity release products available, you can enquire to find the right balance for you, which includes keeping ownership of your home and putting aside inheritance for your children.

 

What Can I Use Equity Release For?

Equity release allows you to release a cash lump sum, tax-free, from your existing home. It is available to homeowners over the age of 55 who have built up equity in their homes and paid off all or part of their mortgages.

Being able to retain ownership of your home is very common and important, since a lot of customers use equity release to pay for home improvements for their existing home, whether making it bigger, more modern or adjusted to senior living.

Other common uses of equity releases include debt consolidation, paying for weddings, school fees or gifting to their children to help them get on the property ladder or start their lives.

 

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You Will Benefit if The House Increases in Value

If you use a lifetime mortgage to release equity from your home, you will continue to benefit if the house increases in price over the years. Since some people take out equity release in their 50s and 60s, they may still have another 30 or 40 years to enjoy living in their home and for it to increase in price.

With equity release plans, you will simply pay back the loan amount and interest agreed when you or your partner die or go into long-term care. But there should be more than enough equity in the home which can be passed onto your other family members as inheritance.

 

Can I Still Leave Money To My Children as Inheritance?

Yes, with more than 100 types of equity release plans now available, you can allocate funds towards your children’s and grandchildren’s inheritance. There are different options available such as creating pots especially for your children or your family can simply inherit everything that is left over once the loan term has ended and the lender has been paid.

 

You Can Still Move Home If You Want To

Even if you have an equity release plan open, you can still move home if you want to or wish to downsize. You will need to make your provider aware of this and the loan terms will likely be adjusted – or you can use any money from the sale to pay off your equity release scheme early and close the agreement.

 

Can I Repay My Equity Release Plan Early?

Yes, you will be able to repay your equity release mortgage early, but note that early repayment charges may apply and this will vary from lender-to-lender, so be sure to check this in the documentation when you apply.

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