I am considering an equity release plan to raise some capital. Can I borrow against a portion of the value of my home?
Ideally I'd like to retain ownership of 50% of the value of my home. Is a remortgage my only option or is there an equity release plan that offers this option?
The type of arrangement you are considering is known as a 'home reversion' plan. With such a plan you sell a percentage of your home (ie 50%, in this case) to the home reversion provider, and have the right to remain in the property. When it is eventually sold (because you are in permanent residential care, or have died) then you or your estate will receive your share of the proceeds.
Reversion plans are not loans - they are partial sales. The alternative is an equity release mortgage, which is an interest-only mortgage at a fixed rate - but you don't have to pay anything, as the interest normally due is simply added to the loan. Because of this the amount you owe will increase each month. Finally, of course, if you have sufficient income, you could consider a normal interest-only mortgage, and just make those monthly payments.
Equity Release mortgages and home reversion plans are both very useful but can be very dangerous! They are really one-way paths, the funds released can affect any means tested benefits, and they must be fully understood.
Start off by looking at the SHIP website (http://www.ship-ltd.org/) where many answers and the code of conduct of SHIP members is explained. If you think you might want to take it further, have a good discussion with an independent adviser, take plenty of time and do discuss your plans with family members if you can. | 12.10.10 @ 01:11