Choosing the Right Equity Release Scheme

Choosing to release equity from their home is an option that many people take at some point in their lives. Most commonly, those people who choose to embark on an equity release scheme do so because they are retired and want to make the most of their assets. Others, though, choose to release equity from their home to start a new business, make a major purchase or fund some other venture. There are different types of equity release available, and choosing the right scheme for you is important to make sure you get the best possible deal.

One way of releasing equity from your home is to downsize. This is a process you can generally undertake without the engagement of a specialist equity release firm - once you have made the decision, you just follow the normal channels for moving to a new house and the difference in cost between your current house and your new, smaller home, is the resultant equity that you can then use for whatever you wish. This can be a good move for people looking to downsize and release some money from their home but who still want to leave something for their children or loved ones as an inheritance.

Another way of releasing equity is what's known as a home reversion plan. This is where you use a specialist company to buy an interest in either part or all of your property in order to receive a cash lump sum. This is typically a good scheme for anyone looking to maximise their lump sum and who isn't too worried about leaving an inheritance behind. It also means you won't have to make any monthly payments, which can be a bonus for some people.

Another option is the 'roll up' lifetime mortgage. This is where you take out a loan on a percentage of the value of the property and the interest is 'rolled up' and added to the loan to be payable on the death of the last applicant in the equity release scheme. The money is reclaimed through the sale of the house. As long as you use a properly registered provider, then the final figure of debt will never be greater than the amount the property is eventually sold for. It's possible to receive your money either in one go or as and when you need it, and the success of this scheme if often dependent on the strength of the housing market so you should be fairly confident that your house will increase in value before applying for it.

You could also go for a fixed repayment scheme, where the interest is not rolled up but you ultimately have to pay back the loan provider more than you originally borrowed. Benefits of this include knowing in advance exactly how much you owe and the fact that there would still be some inheritance left over at the end. Alternatively, you could choose an interest only plan which operates much like a normal mortgage, although the only thing you have to pay back is the interest on the loan. The capital you borrow is paid back following the sale of the property after death.

There are many equity release schemes available and the one you go for will depend on a number of factors. For this reason, it's important to do your research before hand so you know you're getting the deal that's right for both you and the loved ones who'll be left behind after your death.


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When the time comes to retire one of the first things that comes into your mind is, So just how am I going to manage financially? Equity Release could be the answer and Graham Baylis has been working with a firm which could help www.berkleyvittoria.co.uk