Equity Release Schemes - Introduction to the Various Types

It’s every person’s dream to have an enjoyable and financially secure life in their old age. Have you ever thought how it is possible to experience an enjoyable life after retirement? The biggest drawback is that old people cannot go out for work and earn their daily bread!

Some try & maintain some form of employment, even charity work to keep themselves occupied & working that grey matter. This is why these people keep looking for a steady flow of income. Various equity release schemes, pension schemes, insurance plans or retirement schemes can assure them of a steady income in their retirement period.

However, investing time and money in other schemes and plans might not enough. You need to have something more reliable. Equity schemes are an agreement that takes place between a mortgagee and the mortgagor. Such equity release schemes are best suited for old people over age 55 who do not have too much concern as to the inheritance they are to leave their children from the eventual sale of their property.

There is a vast difference in principal between equity release schemes and normal bank loans. The amount originally released via an equity release scheme will be repaid should the borrower either die or moves into long term care such as a nursing home. Amongst all, the roll-up lifetime mortgage is one of the most common forms of equity release that assure repayment from your house value. As long as the borrower is alive, he still has full ownership on his property & can continue living there.

The interest only lifetime mortgage is another type of equity release scheme. It is almost similar to the lifetime mortgage scheme, but with a twist. Rather than the interest rolling up, instead the borrower only has to pay the amount of owed money at the end of the mortgage rather than paying the capital debt and the interest. The amount of interest is paid by the borrower as long as he is living in the property.

On the other hand, home reversion plans are referred to as one of the less common policy types. The home reversion provider offers a lump sum amount to the borrower, who in return sells a part or his whole property. The owed amount is paid after the death of the borrower. One advantage of this scheme is that whatever percentage is unsold will be guaranteed to pass to the beneficiaries upon eventual sale

Equity release can be used for many different purposes, many of them lifestyle, but for many they are essentials to cover the the costs of living in todays economic climate.