Equity release plans

There are two types of equity release plan: Lifetime Mortgages and Home Reversions. They share a number of common features between them, but with a few important differences.

Lifetime Mortgages

A lifetime mortgage is the most common type of equity release plan. You retain full ownership of your home whilst unlocking a cash lump sum from it, which isn’t due to be repaid until you and your partner pass away or move into long-term care.

If you choose a typical plan where you don’t make any interest payments, the interest on the loan is added to the original amount borrowed on a roll up basis, this is known as compound interest.

There are a few options available with a lifetime mortgage which you can discuss with your adviser:

As impartial advisers Key can arrange a combination of the above options tailored to your current and future needs.

Home Reversion

A home reversion plan works differently to a lifetime mortgage as you sell all or part of your property to a reversion company in exchange for a cash lump sum. You can still stay in your home for life and have no monthly repayments to make.

You won’t get the full market value for your house because as part of the exchange the reversion company grants you a lifetime lease on the property. This gives you the right to remain in your home “rent-free”.

Switching plans

If you already have an equity release plan then it might be worth speaking to Key to find out if they could get you a better deal. Interest rates have dropped over the last decade, so by switching to a more competitive rate you could save thousands on the interest yet to accrue on your plan.

As your age will have increased since you took out a plan, you may be able to unlock a larger percentage of your home now than you were able to before. Plus, with flexible new plans arriving on the market in recent years you may benefit from switching to a different type of plan than you chose originally. For example, you might have been in perfect health five years ago, but if you have a health condition now then you may be able to access more money from your home with an enhanced plan.

Whether you took your existing plan through Key or not, if you decide to swap then their expert advisers can take care of the whole process for you from start to finish; ensuring you have a hassle-free experience that could potentially save thousands over the life of your plan. For a free review of your situation call the team today on 0808 156 2674.

To discover more about equity release why not order your free 32-page guide today? Simply complete this online form or call 0808 156 2674 now.

If you are considering equity release we recommend that you read through is it right for you? carefully.