About Equity Release Loans

The value of the home you own less any mortgage you may have on it is deemed to be the equity you have in the property. An Equity release loan is a means of unlocking or making available some, or all, of this value without needing to vacate the property. This can be achieved through two different types of scheme: a lifetime mortgage, which is based on raising a loan against the value of your home (it's equity); or a home reversion scheme, under which all or part of the property is sold to a home reversion company. You can release some, or perhaps all, of the equity in your home as an equity loan to give yourself a tax-free lump sum, a regular tax-free income, or a facility enabling you to borrow against the property as and when required, up to a predetermined level.The cash you receive from an equity loan scheme is tax-free because only your liquid assets change, not your total wealth or income.

The maximum amount of any equity loan is determined by your age, health, and the property value.The amount will vary between lenders and the type of equity loan scheme you choose. You can live in your home until you and/or your partner dies provided your lifetime mortgage or home reversion loan is in joint names.The property is then sold and the proceeds used to pay the accrued debt. Any surplus will form part of your estate. If you sell your property before you die – for example, because you have moved into a care home – you would then normally, in the case of a lifetime equity release mortgage loan, pay the money back to the lender together with the interest accrued from the proceeds of the sale. In the case of a home reversion loan scheme, the company would retain the proportion of the proceeds relating to the share of the property it purchased.