Find out more about equity release so you can make informed decisions for you and your family.
Equity release is a regulated financial product that allows homeowners over 55 to release some of the equity in their property, without them having to move or sell their house.
How is the equity paid to me?
Equity release lets you access this equity as a lump sum or you can drawdown the cash in stages (depending on the type of plan you choose). You can then spend the tax-free cash however you like.
There are no monthly payments either. Interest is rolled up and is only payable when the property is sold.
With all Equity Release Council approved plans, there is a ‘no negative equity guarantee’. This means you and your family will never owe more than the value of your home.
Some homeowners feel that taking out a roll-up Lifetime Mortgage means the size of the loan will increase as the interest on the initial loan accumulates over time.
Several providers address these concerns by offering customers the opportunity to either pay some or all of the monthly interest on the loan and/or make ad-hoc lump sum capital repayments.
So the homeowner can pay all or part of the interest for a fixed period (for example, one year, five years or even up to the lifetime of the loan).
Then from the end of the interest payment period, the interest on the loan rolls up at the rate agreed at the start of the contract.
If the homeowner decides they no longer want to pay the interest during the period agreed, the loan reverts to a roll-up Lifetime Mortgage and no more monthly interest payments are required.
Alternatively, the homeowner can pay a percentage (typically 10%) of the original amount borrowed each year without penalty.
All this means you always stay in control. Of course, Bower will be with you every step of the way too.
Popular uses for equity release
Lump Sum Lifetime Mortgage
Here you can release a lump sum in cash from your property without making regular monthly payments (although some plans let you do this). This lump sum, plus accrued interest, is repaid when your property is sold. This normally happens when you pass on, move into long-term care or permanently leave the property.
Drawdown Lifetime Mortgage
Instead of receiving your cash as a lump sum you can release it as and when you need it. These plans are cost-effective as you are only charged interest on the money you release.
Interest-payment Lifetime Mortgages
Interest-payment lifetime mortgages work like a lifetime mortgage, with the added flexibility that you can make one-off or regular payments of up to 10% off the capital owing (not the interest).
With some plans you can pay a percentage of the interest and have the remainder rolled up, or only pay the interest for a chosen term.
Please note, you need a monthly income to meet the interest payments on this type of plan, and eligibility is subject to credit status for interest-only mortgages.
What are the advantages and disadvantages of Equity Release?
Equity release is a safe option for releasing the wealth built up in your property to provide a source of income, or cash lump sum to spend as you wish.
Naturally, there are implications to this which is why it’s important to fully understand all the advantages and disadvantages of these Lifetime Mortgage plans.
Advantages of Lifetime Mortgages
Disadvantages of Lifetime Mortgages
There is no ‘one size fits all’ when it comes to any financial product. What works for
one person could be the opposite to another.
At Bower Private Clients, we ensure you are fully informed at every stage so you
know that the decisions you make will be the right ones for your individual
We always encourage our clients to involve their family, friends or financial experts
in any conversations we have. That way everyone is clear about what is needed,
and what the next steps are.
Just so you know, we will advise not to proceed with any plans if we believe that is
the best option for you.
Bower provides independent, impartial whole of market advice with an award winning customer service experience. We work alongside our clients using a highly collaborative approach. We provide you with an initial consultation at our expense and we work with you on a short-term or an on-going basis, according to your needs. Only if you choose to proceed and your plan completes, would a maximum advice and administration fee of 1.85% of the loan amount be payable.