There are two main types of scheme:
With this type of scheme the lender agrees to give you a lump sum or a monthly income (or both) based on the value of your home. The amount borrowed, plus any interest accrued, is typically repaid from the proceeds of the property once it is sold. Generally this is when you pass away or move into a care home.
A lifetime mortgage doesn't involve selling any legal ownership of your property and allows you to remain living in the property for the rest of your life. As no ownership of the property is lost, the property is sold when required by you or your family, the debt is paid off and any balance would be retained by you or your personal representatives.
With this type of scheme you sell part or all of your property to a provider in return for either a lump sum or income and a lifetime right to remain living in your property rent-free.
Your home, or the part of it you sell, will then belong to the reversion company, but you are allowed to carry on living in it until you die or move out and you or your estate will retain the value of any share not sold.
There are a number of important issues for you to consider before deciding whether Equity Release is suitable. Please read the section ‘Important Issues to Consider’.
Equity Release may involve a lifetime mortgage or home reversion plan. To understand the features and risks ask for a personalised illustration.