In recent years equity release has become a more acceptable way for elderly homeowners to release cash from their homes, often to provide additional retirement income. Lifetime mortgages have traditionally been the most popular equity release product. These allow you to release a percentage of your property value as a cash lump sum or to provide a regular income. You can continue to live in the property until death or until you move into long term care, when the capital plus interest is repaid.
Drawdown mortgages work in the same way as a standard lifetime mortgage, with the added flexibility that extra funds can be drawn down as and when money is needed. Interest is only charged on the drawdown amount, although providers vary in terms of the timescale over which money can be drawn down.
The economic turbulence caused by the credit crisis has seen the number of equity release providers contract by over a third in the past year, but there is still plenty of products to choose from.
Aviva – Lifestyle
Just Retirement – Roll up Lifetime Mortgage
Prudential – Lifetime Mortgage
The annualised fixed interest rate on this lifetime mortgage currently varies between 6.59% and 6.79%, dependent on your initial advance. To qualify for the lower rate you would need to release more than £50K initially. The minimum qualifying age is 55 and there is a minimum property value of £100K. An application fee of £595 is payable along with a survey fee. You will also be responsible for your own legal fees. For a fixed additional cost you can choose an Equity Guarantee Option which ensures that at least a certain proportion of your property's value will pass to your estate. Prudential also offers an increasing cash reserve lifetime mortgage, allowing you to release cash as and when you require it.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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