
Equity Release
As a result of the current pensions situation in the UK, many retired people
find themselves living in a property worth several hundred thousand pounds,
but not having enough cash to live on. Although there are other reasons for
considering equity release, (e.g. funding home improvements or reducing inheritance
tax liabilities), releasing cash from a property as a source of income is
tempting for an increasing number of people.
Lifetime Equity Release
With a lifetime mortgage, a property owner takes out a mortgage on their home.
The mortgage provider will pay a lump sum or a monthly income (or a combination
of the two). Throughout the mortgage term, the lender will continue to add
the interest owed to the capital sum borrowed. After the death of the owner,
the property will be sold and the mortgage provider will reclaim what is owed
to them (capital and interest) from the proceeds of the sale.Equity Home Reversion
Using a home reversion scheme, the property owner sells their home (or a share
of the home) to a financial institution. The firm will pay a lump sum or a
monthly income (or a combination of the two). In effect, the property owner
becomes a tenant of the financial institution at zero rent or at a very low
rent until they die.

