Equity release

Equity release has emerged as a popular financial solution for homeowners looking to unlock the value tied up in their property without having to sell it. This flexible option allows individuals aged 55 and older to access a lump sum or regular payments based on the equity in their home, providing financial freedom and peace of mind in retirement.

Equity release enables homeowners to tap into the equity accumulated in their property, which is the difference between the market value of the home and any outstanding mortgage or loans secured against it. There are two primary types of equity release schemes: lifetime mortgages and home reversion plans.

  1. Lifetime Mortgages: A lifetime mortgage is the most common form of equity release, allowing homeowners to borrow against the value of their property while retaining ownership. With a lifetime mortgage, borrowers can receive a lump sum, regular income, or a combination of both, without having to make monthly repayments. Instead, the loan plus interest is typically repaid when the property is sold, either upon the homeowner’s death or when they move into long-term care. Lifetime mortgages often come with a “drawdown” option, which allows borrowers to take out additional funds in stages as needed, subject to certain criteria and lending limits.
  2. Home Reversion Plans: Home reversion plans involve selling a portion or all of the property to a reversion company in exchange for a lump sum or regular payments and the right to remain in the property as a tenant without paying rent. Upon the homeowner’s death or when they move into long-term care, the property is sold, and the proceeds are divided between the homeowner’s estate and the reversion company based on the agreed-upon percentage of ownership. While less common than lifetime mortgages, home reversion plans offer a way to release equity without accruing interest, but they typically require homeowners to be older, typically aged 65 or older.

Now, can you take out equity release more than once? The answer depends on several factors, including your age, the value of your property, and the terms of your existing equity release arrangement.

For lifetime mortgages, it is possible to take out additional equity release funds through a process known as “further advances” or “top-ups.” If your existing lifetime mortgage includes a drawdown facility, you may be able to access additional funds as needed, subject to affordability checks and any lending limits imposed by the lender. However, the availability of further advances will depend on factors such as the remaining equity in your property, changes in your financial circumstances, and the lender’s criteria at the time of application.

Similarly, with home reversion plans, it may be possible to take out additional equity release funds by selling a further portion of the property to the reversion company. However, this option may be less common and may involve renegotiating the terms of the original agreement.

While it is possible to take out equity release more than once under certain circumstances, it is essential to consider the implications and suitability of additional releases carefully. Before proceeding with a further advance or additional equity release, it’s crucial to seek independent financial advice to assess your options, understand the potential impact on your finances and estate, and ensure that equity release remains a suitable solution for your needs and circumstances. Contact Us for more information on Equity Release.


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