Types of home equity release
There are two different types of equity release for your property. Each has its own features, benefits and things to be aware of. Read more about equity release.
Releasing equity as a lump sum is a form of lifetime mortgage agreement. You’ll usually receive your finances in one go. However, this arrangement also comes with compound interest. This means the outstanding balance can grow larger than it would with other kinds of loan.
Some borrowers may choose a lump sum equity release, as payments don’t need to be made until the house is sold on, although some options may allow you to make repayments rather than let the interest roll up.
Home reversion plan
A home reversion equity release plan allows you to sell either the entirety or a portion of your property at a below market value. Home reversion plans only apply to those over the age of 65.
You can either receive the funds in a lump sum or through regular payments. After the sale, you’ll then be able to live in the house rent-free. At the end of the plan, your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.