If the market fell for long, given the popularity of such schemes, it could leave lenders with serious deficits to cover. A drawdown lifetime mortgage provides you with an initial lump sum, followed by cash that can be withdrawn in stages. There are many reasons why people choose to release equity from their homes. As equity release requires you to repay your existing mortgage this could free up more disposable income as you’re no longer making monthly repayments.

Is there a dream holiday you’ve been waiting your whole life to take? what is equity release live once, and there’s no reason to deprive yourself of the fulfilment of your travel desires. By choosing the right financial option, you can make your travel dreams a reality. Only if you choose to proceed and your case completes would a typical fee of £1,995 be payable.

If you go for a home reversion plan you can sell as much as 100% of your home to the provider. How much the lender offers you for its stake will depend on your age. The younger you are, the less you will get for the trade, so while a 65-year-old may only get 25% of the portion’s market value, a 90-year-old could get closer to 60%. The size of the lifetime mortgage you can take out will be calculated as a percentage of the value of your property, which is known as the loan-to-value .

However, interest is still charged on the sum borrowed and rolls up over the course of the loan. Another popular use for equity release is so that people can provide their loved ones with a cash gift, effectively an early inheritance. For example, some older people use these loans to help their children or grandchildren buy their own home. In instances when all parties involved are agreed on the outcome, equity transfers are straightforward. However, it is important to look at every transfer individually, as it can become more complicated when there are mortgages or disagreements involved. This is something our residential property solicitors can help you with.

With a Home Reversion Plan, on your death or when you move into long-term care the property must be sold and the proceeds are given to the provider in the proportion in which they purchased the house. For example, if a Home Reversion for 50% was completed, on death, 50% of the proceeds of the house sale must be given to the provider. Compound interest on a lifetime mortgage is the result of interest being charged on top of interest each year when no repayments are made.