Equity Release Schemes Explained UK London, Middlesex
If you are a homeowner best equity release schemes for under 55s or over, then best equity release schemes can allow you to stay in your current home but release some of its value – with the amount being dependent upon the age of the youngest candidate (if jointly owned) and your home’s value.
You can use this money for any legal purpose including repaying an existing loan to improve your home, nationwide equity release explained for a holiday of a lifetime or for helping out your family. It is up to you how you want to use this money.
Types of Equity Release Schemes UK, London, Middlesex
Basically, there are two different kinds of Nationwide Equity Release Schemes
- Lifetime Mortgages
- Home Reversion Plans
Although under both schemes you can live in your property till death or long-term residential care.
Under a Lifetime Mortgage Scheme, you agree to borrow an amount of money and allow a borrower to secure his debt against your property. In this scheme, you either agree to pay interest on a monthly basis or you allow the interest to accumulate upon the borrowed amount. You are legally allowed to live in your property till death and only repay the debt when you (or in joint life cases – the last of you) dies or moves into care.
- With this scheme, you remain the owner of the property, so you will be enjoying all the benefits from any future increase in your property’s value.
- You can either choose not to make any monthly payments or you may wish to make small payments to offset the interest.
- When it is time to sell and clear and your debt, it will be you and your executor selling your property and not the company. Therefore, in most cases, you can expect the best possible price for your property. The amount owed is then repaid with you or your recipients keeping any remaining equity.
- This mortgage is portable, meaning you are free to move at any time and you can transfer it (in most cases) onto your new property.
- Your borrowing capacity depends upon your age and not on your home’s value, income or on your credit rating. Should you be suffering from poor health, you may be able to borrow more if required.
- Where interest in rolled up the amount owed will increase each year. Therefore, if you borrow the maximum amount possible and the house prices fall, you may end up with a small amount of equity. However, under the NO Negative Equity Guarantee offered by nationwide Equity Release Council approved schemes, you can never owe more than your home’s value.
- Under this scheme, you will be compelled to repay the debt owed within a specified time period after the death of the last person or when he moves into care. This period is usually 12 months.
HOME REVERSION PLANS
Home Reversion Plans are different from Lifetime Mortgages. Under Home Reversion Plans, you agree to sell whole or just a percentage (say 25% to 100%) of your property’s legal ownership. In return, you receive a discounted lump sum and a right to remain in your home till death.
Under Home Reversion Plans, to make money, Home Reversion Provider pays you a lower sum than the actual value of your property. In addition, they hope that the value of the share they have purchased will continue to rise as on your death or your earlier move into care. They would then sell your property and take their share of the sale price.
- Under this scheme, there are no monthly repayments or roll-up of interest. Instead, you receive a discounted amount of money, based on the provider’s calculation of your life’s expectancy.
- You will not only be able to live rent-free in your home till death, but you will also enjoy all the benefits from the growth in the value of any share of your property.
- Should you sell only a percentage of your home at the outset, the remaining share offers an assured inheritance to your beneficiaries. For example, if you sell 25% of your property, the remaining 75% is still with you and your estate.
- Any loss suffered by only receiving a reduced value for the share sold, works as an immediate, lawful reduction in the value of the property for purposes of both Long Term Care Means Testing and inheritance tax.
- The plan is available only to homeowners aged 60+.
- Once you have sold a percentage of your home, you lose ownership of that part. You only benefit from any increase in the value of the share that you decide to retain.
- No matter what percentage you sell, you are going to receive a price less than the market value of your home.
- The plan is normally irreversible.
- You cannot switch your scheme provider. Once you have sold a share of your property to any provider, you must deal with the same provider, should you want to sell a further share.
- You still must take care of all the repairs and insurances of the property. It remains your responsibility.
- Should you die early, Home Reversion Plans can prove very costly because you do not receive the full value of any percentage sold of your property. Although, should you (or the last owner) die/s within 5 years, you may receive an Early Vacancy payment.
- The plan is very slow and inflexible. In case you want to sell further shares of your house, you must deal with a separate legal transfer. This will further require new valuations, financial and legal advice. This can take up to 3 months before you receive any money.
So Why Consider A Home Reversion Plan?
Through this plan, your children are guaranteed to receive a fair share of your home.
If you do not have any dependents or beneficiaries and would like to enjoy the maximum benefits from your home value, you can then choose to sell 100% of your home under full Home Reversion Plan.
differences. This will help you decide, which is best.
Please contact us today to find out more.