How does Equity Release Work?

There are a number of different schemes available but they mainly fall into one of two categories:

·          Lifetime Mortgage

·          Home Reversion

With a lifetime mortgage you take out a loan, which is secured on your home. When you die or move out of the property (perhaps to a care home) the scheme will normally end and your home will be sold. The proceeds of the sale will be used to repay the outstanding mortgage. If you use a lifetime mortgage scheme, you continue to be the owner of your home but the property is subject to a mortgage. You can continue to live in your home for as long as you want to.

A home reversion scheme involves selling all or part of your home to a third party. This will normally be either an individual or a home reversion company. This means that your home, or part of it, now belongs to someone else. In return for selling your property, you can receive either a cash sum or a regular income. However, even though you have sold your home, you retain the right to live in it for as long as you want to.

With either a lifetime mortgage or a home reversion scheme, if you receive a cash lump sum and your aim is to generate income, there are a number of different ways to achieve this - refer to your Annuity Bureau Consultant for more information.