arrow with text

Types of equity release schemes
content image

Types of equity release schemes

There are two types of equity release schemes generally available to property owners in the UK. These are lifetime mortgages and home reversion plans.

As the name suggests, a lifetime mortgage is an actual mortgage, whereas home reversion plan involves the sale of all, or part of your property to an equity release scheme provider. So lets look at each one of these plans a bit more closely

Lifetime Mortgages

A lifetime mortgage is a loan on the house that is usually between 15% to 20% of the value of the property. The property owner retains full ownership of the house. The loan is paid either as a cash plan where a lump some of the money is paid or drawn down with the interest rate rolled up. Alternatively there are home income plans, which are essentially annuity based income plans. Upon death or long term care, the property is sold to repay the capital plys the interest that is owed, with any excess going to the estate

Home Reversion Plans

A home reversion plan means that a property owner sells either part or all of the property. The sale allows the owner to remain in the property until death or long term care. This type of equity release scheme is not a loan but in fact a sale. Upon death, the house is sold and part of the house owned by the lender is returned to them with the remainder going to the beneficiaries of the estate. The equity release provider will also get part (or all) of any increase in the property value.





Copyright © 2012 Equity Release Schemes. All rights reserved

Pages services 1 services 2 Equity Release Questions