A lifetime mortgage allows you to release a lump sum of cash from the value of your property. With this type of equity release plan there is no requirement to make regular monthly repayments as the amount that you release, plus any interest accrued, is repaid from the money made when the property is sold. This happens when you die, move into long-term care or permanently leave the property.
Drawdown lifetime mortgage
This is similar to the standard lifetime mortgage. However, with the drawdown lifetime mortgage, you can access your money with more flexibility. Rather than just receiving a one-off lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these equity release plans can often prove to be more cost-effective.
Interest only lifetime mortgage
This sort of equity release plan is like a standard lifetime mortgage. However, with an interest only lifetime mortgage you can choose to make repayments in full or on a regular basis to reduce the effect on the value of your estate. Some plans allow you to make repayments that are equal to or less than the amount of interest that is charged. The balance and the interest accrued is paid off from the value of your estate once you have died or have moved into long-term care.
Home reversion plan
A home reversion plan allows you to exchange the ownership of some or all of your property for a lump sum of cash, along with the right to stay in your property, rent-free, for as long as you live subject to the lenders terms and conditions. This is also known as a ’lifetime lease’ and is only available to those who are aged 65 or over