A Lifetime Mortgage will reduce the value of your estate and may affect your entitlement to means-tested benefits and tax status. The impact of not servicing monthly interest payments on a Lifetime Mortgage is that the outstanding debt can grow rapidly, thus reducing the value of your estate. For example, if the interest rate was 7% a year, a £50,000 loan would double to £100,000 after 10 years assuming no repayments are made. This is an example for illustrative purposes only and personalised advice and recommendations should be sought from a qualified professional. You are strongly advised to register a lasting power of attorney. This will allow your affairs to be managed by somebody else if your mental abilities significantly decline.
Home Reversion advice is referred to a third party. Neither Prospect Tree Mortgages nor PRIMIS are responsible for the service received.
What is Equity Release?
Equity release is a product that lets homeowners aged 55 and over, take some of the money built up in their home, as a tax-free cash sum. There are two types of equity release, lifetime mortgages and home reversion plans.
If you have heard the term Equity Release and are unsure of what it means or you have been advised that this may be a solution to any financial problems you may have, you will find that it represents an opportunity to release cash (tax free) that is tied up with your property.
The fact that an Equity Release provides this benefit without having to move home or be forced into making additional interest payments means that it will appeal to a great number of people.
One easy way to think about Equity Release is to consider it as a type of loan where you can access the money tied up in your property. A fixed interest rate is applied to the amount you borrow, and the interest accrues over the term of the loan. The total amount owed, including interest, is usually repaid when the property is sold, typically when you move into long-term care or pass away.