This generic term is regularly used for borrowers over 50 years of age. Two main subcategories divide this topic – Life Time Mortgages and Reversionary Plans. Life-Time Mortgages can again be subdivided into Retirement Interest Only Mortgage. These are assessed like a normal mortgage and borrowering will be dependent on income and current property value and the familiar Equity Release Mortgage where assessment is largely based on the borrowers age plus the true property value.
With a lifetime mortgage, you retain full ownership of your home. With a home reversion plan, you sell a percentage of your home, so full ownership is shared with the provider.
An RIO mortgage allows older borrowers to pay interest only on their mortgage subject to affordability. The loan is repaid when they die, move into long-term care, or sell the property.
This is a less common form of Equity Release. With a Home Reversionary Plan you sell all or part of your home in exchange for a tax-free lump sum or regular payments. The value given will be dependent upon your age and your health. It is likely to be considerably less than the actual value of your home. You will be granted a lifetime lease, guaranteeing you the right to stay in your property rent-free for the rest of your life. We do not provide advice on Revisonary plans.
For a lifetime mortgage, the loan and any accrued interest are repaid when you pass away or move into long-term care, usually through the sale of the property. In a home reversion plan, the provider receives their share of the property’s sale proceeds.
Yes, some equity release plans offer inheritance protection, allowing you to preserve a portion of your property’s value for your beneficiaries. However, the amount left as inheritance may be reduced depending on the type of plan and how much equity you release.
