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Equity Release is a way of unlocking some of the equity in your property whilst you still reside there provided you are over the age of 55.
There are two main types of Equity Release scheme; the Life Time Mortgage and the Home Reversion Plan.
The first type of Equity Release is known as a Life Time Mortgage. This is the most popular Equity Release Scheme and the Scheme which we specialise in here at Brethertons. This is where you borrow against the value of your home, releasing a loan which can be used to provide an income, a lump sum or both. The loan does not have to be repaid until you pass away or move into alternative accommodation. Interest is usually at a fixed rate, compounded monthly, rolled up and added to the outstanding loan so that the debt increases as time goes by.
The second type of Equity Release scheme is known as the Home Reversion Plan. This involves all or part of your home being sold to a private company known as a Reversion Company; in return for which you receive a cash lump sum, an income or both. You can remain in your house, rent free or for an nominal rent, for the rest of their life. When the property is sold, usually after you have passed away or if you need to move into alternative accommodation, the Reversion Company receives the proceeds of the sale, depending on what share of the property has been sold to them.
If you are thinking about an Equity Release plan, we would suggest that you contact an Independent Financial Advisor and talk to them about this in more detail. All Advisors dealing with Equity Release Schemes must have a specialist qualification. Here at Brethertons, we are proud members of the Equity Release Council and operate exclusively under their principles.
Once you have decided to proceed with your Equity Release, you will then need to instruct your Solicitor. It is probably wise to instruct a Solicitor who is local to you as your Solicitor will need to meet with you face to face during the transaction. They will need to advise you on all of the documentation which you are entering into, obtaining your signature to the Mortgage Deed and providing a Solicitors Certificate to the Equity Release provider.