Equity Release Advice from Headstart Financial Planning

Equity Release

Equity Release is a way of releasing some of the money that's tied up in your home, providing you with a cash lump sum. This is different to re-mortgaging which can involve capital raising. It is a complex area of financial advice and it’s important to speak to an adviser to guide you through the options available.

Lifetime mortgages are available to homeowners aged 55 and over. The amount you can release will depend on a number of factors including your age, the value of the property and the type of the property. You can continue to live in your home and use the money for your needs.

There are two main routes you can take to release equity:

  1. Home Reversion Scheme
    A scheme where all (or part) of your property is sold to an equity release company, entitling you to receive a cash lump sum or ongoing income whilst retaining the right to live in the property rent-free until death.
  2. Lifetime Mortgage
    Typically allows an older person to borrow an amount of money against the value of the property, with the interest and capital being rolled up rather than paid monthly and then paid back upon death or subsequent sale of the property. With a lifetime mortgage, you keep ownership of your home and you may be able to release more in the future.

There are considerations though. Taking a lump sum, plus the costs, will reduce the equity in your home, and therefore the amount of any inheritance you leave. Your tax position and any entitlement to welfare benefits may also be affected. This is an area that we can guide you through, pointing out the options and consequences.

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