Equity is the word used for the value of your home after the mortgage or any charges have been paid. If you want to stay in your home but need some money to make life more comfortable, then you may like to investigate an equity release scheme.
There are two schemes available. One is a lifetime mortgage and the other option is home reversion. Both these schemes are complicated and it is therefore always advisable to seek professional advice to see if either is suitable for you.
You need to meet certain criteria to participate in these schemes, in the case of equity release, you need to be a certain age which is usually 55 and own your own house. You are able to take a lump sum from your property or have the money as a regular income. You are able to stay in your home and will still be responsible for the general upkeep or your property.
You may decide that a lifetime mortgage would be more suitable for you which will mean that you take a loan using your home as security. You still own your house but will be paying back a mortgage under pre agreed terms. There is more than one mortgage available with this type of scheme so you have some choice as to which would suit you. Should you at a later date move to a care home or decide to move house then any mortgage you have taken out will be repaid from the proceeds from the sale of your house.
A further option is a home reversion scheme this is where you allow a company or an individual to buy all or part of your property. Although this means that you are no longer the owner it does allow you to remain in your home as a tenant. Under this arrangement you will receive less than you the market value because the purchaser is not able to realise any cash on his investment until you die and that can be an unknown length of time. So as the purchaser is taking a risk with his capital the value put on your property will be lower.
In most cases the money is taken as a lump sum or a regular monthly income. This is a complicated business and is it most important to take advice from an experienced financial advisor who will help you find the best option.
These schemes are not suitable for everyone and it is best to think very carefully and consider all the possible options and to check the small print details of any arrangement carefully so that you remain as protected as possible.