What is equity release?

The value of your home minus any outstanding mortgage can be described as your 'equity'. Equity release allows you to release this cash from your home, which you can then spend on whatever you like.

If you are struggling to accumulate a decent pension and starting to worry about how you are going to fund your retirement, you may have considered an equity release scheme.

Providing you have a property and are over 55, you could qualify for an equity release scheme in the form of a lifetime mortgage or a home reversion plan. Both are pretty straight forward in theory in the way that you borrow money against your house on the premise that you will pay it back in payments or through sale of the house after your death.

Equity release allows you to release the tied-up equity in your house, that is, the balance on your property, that is the actual monetary worth of your assets minus liabilities. Apart from the requirement that you need to be a legal homeowner in the UK, age is the primary eligibility criterion for equity release mortgage scheme.

Equity release advice from a trusted source can be very useful for those home-owners who are looking to access some of the value locked in their home. Life after retirement can be made much more enjoyable. People release equity for all sorts of reasons including home improvements, buying a car, holidays and gifting to family. At the same time getting the right equity release advice is essential as this is a big decision.

There are two main types of equity release, namely lifetime mortgage or home reversion plan. Choosing the right arrangement for you is very important. The right equity release advice will help you to have a deep understanding of the commitments and obligations that you will agree to, while selecting the equity release arrangement.