An equity release remortgage involves either remortgaging an 'unencumbered' (or mortgage-free) property to release cash from the value that has been saved up, or moving from your existing mortgage provider to an equity release remortgage specialist provider. Either of these options will lead to one of two equity release remortgage options; a lifetime mortgage or a home reversion scheme. Reasons why people would choose an equity release remortgage as opposed to a standard remortgage loan include the fact that they can avoid making interest payments or loan repayments for the rest of their lives, whilst being able to remain in their home, and having a secure, guaranteed income throughout their retirement.
It is recommended that before going down the route of an equity release remortgage, you consider the other options available. If you are concerned about the fact that you will give up ownership of the property under the home reversion arm of an equity release remortgage, you should instead consider whether you have sufficient income in your property to remortgage your property in the standard way. If you are a member of a pension scheme, you could put the saved lump sum into an annuity scheme or other investment scheme that would provide you with a lifetime income. It is important to bear in mind that you do not need to surrender ownership of all the equity in your property with an equity release remortgage, but could instead choose to either sell or mortgage a proportion of the property and pay it back gradually or when the house is eventually sold.
An overview of Equity Release Remortgage products
- Home Reversion Plan: You sell all or a proportion of your property to a home reversion company, for a fixed income and the ability to continue living in the property for the rest of your life. Interest on the loan is taken in the form of an increased property value when the house is eventually sold by the equity release remortgage lender.
- Lifetime Mortgage: You would take out an equity release remortgage on your property, in much the same way as you originally mortgaged it. However, you can choose to either pay back the interest, the loan itself or nothing at all until the house is sold.
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