The Options Available To You
When choosing an equity release plan you will have two types of scheme to choose from - a Lifetime Mortgage or a Home Reversion plan, both of which could allow you to take a cash lump sum.
Lifetime Mortgages
The most popular method of releasing cash is currently the Lifetime Mortgage. A Lifetime Mortgage is a loan which enables you to release the value tied up within your home allowing you to receive a cash lump sum, which you can spend as you choose. This long term loan which is secured against your property, is paid off when your home is sold or at the time of your death. No interest repayments are required until the loan is paid off with the interest being “rolled up” with the loan.
Throughout the period of the loan you and your partner are able to continue to live in your home and benefit from an improved lifestyle as a result of the release of the cash lump sum.
Lifetime Mortgages pay out a cash lump sum at the commencement of the mortgage, however a Flexible Lifetime Mortgage allows you to choose a lower initial lump sum with access to a Cash Reserve from which you could withdraw more monies as and when required. This ensures that you keep any interest rolled up to a minimum and allows you to decide when you wish to make withdrawals in the future.
Advantages of a Hodge Equity Release Lifetime Mortgage:
- Available to those aged 55 and above.
- No interest repayments made during your lifetime.
- You may still benefit from any rise in house prices as ownership of your home remains with you.
- Your next of kin may still receive funds from the sale of your home on your death, depending on the size and length of the loan.
- No Negative Equity guarantee ensures that you do not have to make up any shortfall between the selling price of your home and the amount of outstanding loan and interest.
- Choice of a Flexible Mortgage Option allowing you to decide the most appropriate time to withdraw funds and as a result minimising the amount of rolled up interest.
Disadvantages
- The longer you live the less equity you own.
- If you live a long time you may end up owing the total value of your home, leaving nothing for your next of kin.
- Once you commence a plan you will not be able to use your home as security to raise further funds from any other provider.
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. This should be arranged through your independent financial adviser or mortgage broker.
Home Reversion Plan
Available to those aged 65 and above, a Hodge Equity Release Home Reversion Plan involves selling part of your home to Hodge Equity Release. If you choose a Home Reversion Plan you will be granted a lifetime lease allowing you to remain in your property, rent free for the rest of your life.
Planholders agree to sell a percentage of their property and receive a proportion of that percentage, which is dependent on their age and gender, as a tax-free cash lump sum.
When the property is sold at the time of death, the proceeds of the sale of the house, minus any selling costs, are divided between Hodge Equity Release (the home reversion company) and yourself in the proportions that each party owns. As a result you may leave any share of the home not sold to Hodge Equity Release as an inheritance to your estate.
Advantages of a Hodge Equity Release Home Reversion Plan
- Plan holders can live in their home rent free throughout their lifetime.
- Plan holders can choose to leave a proportion of their home to their next of kin.
- Plan holders benefit from any rise in house prices on the proportion of their home not sold to Hodge Equity Release.
Disadvantages of a Hodge Equity Release Home Reversion Plan
- Plan holders will not benefit from property price growth on the full value of their home.
- Plan holders do not own all of their home.
- Once you commence a plan you will not be able to use your home as security to raise further funds from any other provider.
This is a home reversion plan. To understand the features and risks, ask for a personalised illustration. This should be arranged through your independent financial adviser or mortgage broker.