Equity Release is a way of unlocking the proportion of the value of your house or equity (cash) tied up in your home without necessarily having to sell it or move to another house. In exchange, you have the option to either borrow against the value of your home or sell all or part of it for a tax-free lump sum or regular payments. There are some available plans that give you the option to “draw down” further equity at a later date, based on your specific requirements.
Equity in this case is the difference between the current value of your house and the total amount you owe on it. For example, if your house is worth £300,000 and your outstanding mortgage amounts to £100,000, then you have £200,000 equity on your property.
The equity release scheme is designed for people who own property outright or only have small mortgages left to pay. In the case of home reversion, the loan taken will then be repaid at a future date, once the property is sold by the lender.
Types of Equity Release
There are two main types of equity release. They include;
· Lifetime Mortgage – Lifetime Mortgage is a type of equity release where you can choose to extract your funds either in a single lump sum or in smaller amounts over time, up to the maximum limit agreed with the plan provider.
You can also choose to retain some of the value of your house or property as an inheritance for your family. This generally means that you can benefit from releasing equity from your property while ensuring that there is still something left to pass on to your children.
· Home Reversion – Home Reversion is a type of equity release that allows you as the house owner to access all or part of your property value while still retaining the right to live in it. You don’t have to move out. With Home Reversion, the provider purchases all or a part percentage of your house. This way, you know what portion of your house you have parted with and what is remaining, or rather “ring-fenced” for later use.
Lifetime Mortgage Equity Release
If you are considering a lifetime mortgage, there are a few important things you should know.
· You must be aged 55 and over, and have property worth at least £75,000 and must be able to release a minimum of £15,000
· You must have a relatively small or no mortgage outstanding. If any, you must use part of the amount released to pay off the existing mortgage
· You have the legal right to remain in your property for life, until you decide to move out
· You are fully protected with no “negative equity guarantee”. This means that you or your estate will never have to pay back more than what you receive from the final sale of your house, provided it’s sold for the best obtainable price
· You can protect a part of your home value with your inheritance guarantee
· You can only borrow up to 60% of the value of your property
Home Reversion Equity Release
With Home Reversion Equity Release, you are allowed to access all or part of the value of your property while still retaining the legal right to live there, rent free. In this case, it’s the provider who makes the purchase.
After the eventual sale of your property, the proceeds are shared according to the remaining proportion of ownership.
You may get more funds depending on your age and existing medical conditions. You have the option to take out a single lump sum or regular payments and a lifetime lease, which guarantees you the right to stay in the property rent-free for life.
If considering a Home Revision Equity Release, know that;
· You must be at least 60
· You have the right to remain in your property for life until you decide to move to a long-term care facility or any other property
· You have no “negative equity guarantee”
TIC Finance – Equity Release and How it Works
TIC Finance will help you to release built up equity in your home without having the need to sell your home.
This scheme enables home owners to release lump sums of money from their property which can be used however the homeowner deems fit. Not only is this scheme secure it also enables homeowners more flexibility with their personal finances and in today’s society it is growing incredibly popular with the everyday landlord.