Releasing equity from the house is called equity release scheme. Currently, there are three types of equity release schemes existing, as described below:

Lifetime Mortgages Scheme

It allows you to spend the loan amount by releasing equity from your property. usually, there is no monthly repayment to meet.

Advantages of lifetime mortgage scheme:

o You can draw a good amount of money without being obliged to repay.

o You reserve full ownership of your property

o This scheme is available to younger individuals (55+)|The scheme is for persons having 55+ age.

o Some plans of this scheme let you pledge a legacy for your family
Disadvantages of lifetime mortgage scheme:

o The sum you leave as a legacy will be decreased.

o The applied interest will be compounded and increase quickly

o Pre payment attracts early repayment charge.

Home Reversion Scheme

It is a method of equity release in which you sell the whole or a part of your house to a reversion scheme company in exchange for a bulk amount of money (which is tax-free) with no monthly repayments and a secured lease of lifetime. You can still stay in the house rent-free. If there is any variation in your property value, then, you as well as your reversion plan company split the value, as per the percentage owned.

Advantages of Home reversion Scheme

o Inheritance commitment is flexible.

o No regular repayments

o You make profit from any increase in value of the share of the property you own.

o Normally, when you are younger, you can earn more money out of a home reversion scheme rather than lifetime mortgage scheme

o More money can be released when you grow older.

Disadvantages of Home reversion scheme

o Normally, you do not get the full market value of the share of your belongings you sell, since the reversion scheme company will offer you complete right to live in it without any rent, and the company won’t get back its fund for a number of years.

o This scheme normally can’t be reversed as you are selling a part of your house.

o A large numbers of reversion scheme providers do not assure further advances.

Drawdown Scheme

This scheme has the similar advantages and disadvantages as a common lifetime mortgage scheme, as well as some more that are exclusive to this type of equity release scheme. The major difference with a drawdown scheme is that you cannot ask for the full amount of money available to you, immediately. Alternatively, you choose on a maximum amount of equity you want to release, and withdraw the money in stages you want to.

Find out more about the best equity release schemes and equity release loans at onlineequityrelease.com