Prime Time Financial

Equity Release is an increasingly popular way of enhancing finances in retirement. Current schemes generally offer options to raise a lump sum from the value of your house, or to take a more regular income.

There are two types of equity release plan:

• Lifetime Mortgage
• Home Reversion Plan

The first of these will be familiar to anyone who has had a mortgage to buy a property. The difference with a Lifetime Mortgage is that the lender does not expect you to make any regular repayments. Only when your property is vacated - typically on the death or moving into long term care of the last occupier - does the lender expect the loan to be repaid. At that point, the property needs to be sold to enable this to happen.

The second - the Home Reversion Plan - is not dissimilar in practice, although legally the arrangement is different, with the Home Reversion provider owning a percentage of the property.

Equity Release plans generally offer a "No Negative Equity" guarantee (in fact this is a condition of belonging to the industry body - SHIP). So a borrower (or the estate) can be sure that the amount of the loan will not exceed the value of the property.

The amount of the equity release plan that is offered will be dependant on age, as well as on property value.

Advice on Equity Release plans can only be given by financial advisers with an additional qualification - however, at Prime Time Financial we do hold this qualification. 

Last reviewed 25th May 2011