We help you understand mortgage equity release schemes so that you can compare the best deals from top UK providers.
An equity release plan lets you unlock some of the value in your home, usually paying you a tax free lump sum. You could to top up your savings, make a one off purchase or buy an annuity to get a reliable retirement income.
What's more, in a sense equity release borrowing could pay for itself. Rather than repaying the loan bit by bit with monthly repayments like you do an ordinary mortgage, equity release mortgage providers tend to get repaid when you sell your house or, if you've passed on, from your estate. It does cut down what you'll have left to give to your nearest and dearest when you pass on; this is something you'll need to consider.
This lets providers offer no age limit lifetime mortgages to elderly and retired people; however it means equity release loans can only be offered to those without an existing mortgage or outstanding mortgage payments, i.e. who own their home fully.
Equity release interest rates also tend to be higher than the average mortgage, so to get the best home equity release schemes UK wide you should always compare a wide range of offers against your particular circumstances.
How to compare equity release mortgages UK
First, you'll need to decide how much you want to borrow and check what percentage of your home's value this represents, known as the Loan To Value ratio (LTV). Compare your loan amount and its LTV to each provider's maximum lending limit to make sure you'd be eligible.
Remember, loans representing a large proportion of your home's value will appear more risky to lenders and may get charged higher interest rates, so be realistic about how much you want to borrow. If in doubt it's worth speaking about your equity release options with Independent Financial Advisors.
Next, check the terms and conditions attached to each suitable deal. For example, consider if they allow early repayment and compare any charges for that facility; plus check if/when the loan's headline offer is set to expire during the loan term.
Once you've established your priorities you can use an equity mortgage release comparison to list the deals available and compare features at a glance. You should get individual quotes from the most suitable providers to find which option works out as the cheapest and best value equity release loan for you.