There are 2 types of Equity Release Mortgages, both are very different to a “normal” Mortgage. A conventional Mortgage secures a debt against the property which needs to be repaid on a Monthly basis.
The first and most common type of Equity Release is a Lifetime mortgage – the homeowner retains ownership of the property but the repayment accures on a monthly basis and is rolled-up over the homeowner’s lifetime.
The other type of plan is a reversion plan – where the homeowners sells all or part of the property to the equity release provider in return for a right to remain there rent free.
An Equity Release Mortgage however is very different.
– There are no Monthly payments due, although there can be the option to make monthly payments should you wish.
– The debt would normally be paid on death or sale of the property.
– They are only available to people over the age of 55.
– The amount owed will never go above the value of the property (so no chance of negative equity) with regulated firms.
They have a very particular part of the Market and will never be mainstream.
– Those on interest only Mortgages which need repaying and there is no repayment vehicle.
– Those wanting to release the money to give to their children/grand children etc to help them out.
– Those who need to repay a debt but would not be able to obtain a conventional Mortgage due to affordability changes or bad credit.
Equity Release Mortgages have a bad reputation. We thought exactly the same when they we first started to discuss them and almost ruled out offering them. However many firms offering this service are high street companies you will ave heard of and perhapse even use. It is important you only use reputable firms regulated by the FCA. Mortgage Success does not currently offer advice on Equity Release, however we do work with another company that we can refer you to. We are also more than happy to come to the meeting to ensure you are obtaining correct information.