Equity Release Calculator

 

There are two equity release options:

• Lifetime mortgage: this is the most popular option with the age 55 and over. You take out a mortgage secured on your property provided it is your main residence, while retaining ownership. You can choose to guarantee some of the value of your property as an inheritance for your family. You have the option to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.
• Home reversion: You have to be 65 and over to take this option. Here a provider pays you a tax-free lump sum for a portion of your home at below market value. You can live in the property until you die. When it's sold, the proceeds are split based on the percentage you own and the lender owns. If your property value rises significantly, so does the amount it gets. You can also guarantee some inhertitance for your family with this option.

If you still think that equity release is right for you, here are some tips:

1. Don't borrow the full amount you need in one go. The sooner you borrow, the more expensive it is, as the interest has longer to compound. Borrow as little as you need now, and wait as long as you can to do it again.

2. Ensure you use a company that's a member of the Equity Release Council. This trade body's members must promise a 'no negative equity' guarantee.

3. Get advice before you do it. For the best advise speak to a financial advisor or independent mortgage broker.

4. It can affect your benefits. Having cash rather than a property can affect the benefits you're entitled to, so check the impact first.