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Mortgage glossary

Equity Release

Equity release is a way for older homeowners to access some of the value of their home without having to make repayments or move house.

With equity release, or home income plans, homeowners are effectively borrowing against the value of their home - with the interest payments deferred until they die or move into care and their home is sold.

This means the homeowner can remain in their property without having to make any payments.

The money released can be taken in a lump sum, or used to buy an annuity, which would provide an income for life.

For a long time equity release was considered as a last resort, but since schemes have received Financial Services Authority regulation it is increasingly seen as a mainstream way of funding retirement.

Experts recommend that someone thinking about raising capital this way should consult with relatives and financial advisors before going ahead with the plan.

Homeowners considering equity release should look for a lender that is a member of the industry body Ship (Safe Home Income Plans).


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