Equity Release is the generic term for any financial product that allows you to borrow against the value of your home.

There are then 2 main types of Equity Release plans – a lifetime mortgage or a home reversion.

Lifetime Mortgages

Lifetime mortgages are the most popular type of Equity Release plan (they total over 99% of plans). They are a form of mortgage, with a first legal charge on the property, but rather than having a fixed term of years, they run for the rest of your life. There are usually no repayments to make, however, most plans now allow repayments for those wishing to control the future balance.

Home Revisions

Home reversion plans work very differently as there is no interest element involved. With these schemes, you sell part or all of your property, in return for a tax-free lump sum, a regular income, or both.

There is usually no rent to pay, and you receive a lifetime tenancy, meaning you can remain in your home for the rest of your life. These plans are less common, and you will no longer own 100% of your property as you have agreed to sell all (or a proportion) of your home to the reversion company.