How Equity Release Scheme
work
Home reversion plans: These plans mean that you sell all or part the house to a provider in return for a cash payment. Typically used where there is a need to buy an annuity, or for properties where equity release mortgages may not be available, or for people when their religion forbids them to borrow money where interest is charged (Muslims for example). Some schemes will allow you to buy back part of the house at a later date.
Lifetime Mortgages: A loan secured against your home payable upon the death of the second person (if a joint application) or when both parties have left their house to live in a care home. Lifetime mortgages accrue interest, but you can pay this interest just like an ordinary mortgage, you can also pay back capital with most plans, meaning that the amount borrowed could decrease over time. You need to be aged 55 or over to qualify for one of these types of mortgages.
LIFETIME MORTGAGES | HOME REVERSION | |
---|---|---|
How it works › | Borrow money and pay nothing until death | Sell all or part of the house |
Do you still own your home? | Yes, but the mortgage has to be repaid if you move into long-term care or after your death | NO if you sell all or part of the house. But you will be a tenant of the reversion company |
Do I have to pay anything? › | NO, unless you want to | NO, some home reversion plans charge a peppercorn rent ( £50 per year) |
How does the company get it’s money › | House is sold, when 2nd death occurs. Lender is repaid | House is sold after death or after you move out permanently. Lender is repaid |
NUMBER OF YEARS SINCE YOU TOOK OUT THE LOAN | Amount you owe If you take a lump sum of £50,000 at the start, pay nothing and the interest rate is: 5%, 7%, 9% | ||
---|---|---|---|
5% | 7% | 9% | |
5 › | £63,814 | £70,127 | £76,931 |
10 › | £81,444 | £98,357 | £118,368 |
15 › | £103,946 | £137,951 | £182,124 |
20 › | £132,664 | £193,484 | £280,220 |
20 › | £169,317 | £271,371 | £431,153 |
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Mortgages
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