An Equity Release Mortgage, otherwise known as a lifetime mortgage, is a long term loan secured against your home which is repaid when you die or go into long term care. The main difference with an Equity Release Mortgage is during your borrowing period you make no monthly repayments. The main benefit to this is you can have a large sum of money and you will not have to make large monthly repayments out of your retirement income.
The interest for an equity release mortgage is added to the loan and repaid at the end. Lifetime Mortgages have no set term, as they are as the name suggests, a mortgage for life. Over time the loan will increase in value, however, this can generally be offset by future increases in your property’s value. In most cases the value you purchased your home for compared to the current value means your property has increased in value over time. Speaking to a Specialist Adviser will help you understand how your property has increased on a percentage basis each year.
The equity you can release from your property is tax free and can be used for anything you wish.