Equity release is a way for homeowners, especially those who have owned their property for a long time, to tap into the increased value of their home. As your property value goes up and your mortgage decreases, the difference is called 'equity.' You can access this money through an equity release plan, with the most common type being a lifetime mortgage.
Unlike traditional mortgages, equity release, including lifetime mortgages, is simpler. Lenders mainly consider the age of the youngest homeowner, your location, and your property's value to decide how much they can lend you. They don't dwell on your income, expenses, or credit history, making the process quicker.
One thing to keep in mind is that choosing equity release may impact the value of your estate left for your loved ones. Monthly repayments aren't required, but if you don't make them, the interest on your plan will grow over time. For instance, if you borrow £100,000 at 4% interest, after 18 years, the amount to repay could double to £202,581.
However, there are ways to manage the interest effectively, and it's essential to consider that your property's value may continue to rise.
