Many of us own homes that have considerable amounts of equity. That means that their value, less all outstanding debts secured on them, is significant. Sometimes we might find ourselves in need of this equity which is tied up in our homes. This need could relate to a personal crisis such as a death in the family or divorce, it could be because we have found ourselves in difficulty with debts and need to access these funds in order to get ourselves straight with our creditors, or we might simply want to get our hands on the money for a special purchase or a holiday. Whatever our requirements, there are various equity release schemes that will allow us access to these funds.
There are a number of equity release plans run by companys such as swift capital. These are a ‘Lifetime Mortgage', a ‘Reversion Plan' and ‘
sell rent back'
In the case of a lifetime mortgage the home owner borrows a sum equivalent to a fraction of the equity which is paid as a lump some or over time as income. The homeowner does not make any repayments on this loan but interest accrues on it. The full loan amount along with any accrued interest must be repaid should the owner ever sell the property, or in the case of the owners death.
In the case of a reversion plan the property is sold at a reduced price, but the owner has the right to remain in the property rent free until the owner's death.
Bothe of these two schemes are only available to people who are at least 55, and in many cases 60. Also, there are restrictions on the amount of equity that can be released under these schemes, and release of 30% of total equity would be typical.
There are no age restrictions on the third plan, sell rent back. Here the owner sells the property to an investor but is allowed to remain in the property as a tenant paying rent. With this scheme it is possible to obtain about 75% of the equity.
These schemes are becoming increasingly popular, and are all subject to FSA regulations, which means that the property owner is protected.
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There are a number of equity release plans run by companys such as
swift capital. These are a ‘Lifetime Mortgage', a ‘Reversion Plan' and ‘
sell rent back'
