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Releasing Equity from your home

Many people get to a stage in their life where they have paid off their mortgage, the children have left home and they may be planning or considering retirement.

It is fair to say that most people are aware of the substantial increase in property prices over the last few years, but many people may not have sufficient money available to fulfil their dreams and desires in retirement. An option is to release some of the equity in your property. Releasing equity allows you to make use of the capital in your property without the need to move out of your home.

There are various ways of releasing the capital from your property. This is a complex area of advice that needs to be discussed on an individual basis with each client.

Many people today are "Asset Rich , Cash Poor" A typical example is where someone owns a property with little or no mortgage on it . The monetary value after any mortgage on the property is known as Equity. This means that they have assets but they cannot be easily used.

There may be many reasons why you would need access to the equity in your property. There are various forms of schemes available designed to release the equity from your home

The two main types of available products are Lifetime Mortgages and Home Reversion Schemes.

A lifetime mortgage entails taking out a mortgage and for the loan to be secured against your property. Interest is either added to the loan or alternatively can be paid on a regular basis. This will vary from product to product. When you die or in some cases need long term care the mortgage plus any interest will be repaid and any remaining proceeds will be available to you or your estate.

A home reversion scheme allows you to sell all or some of your property to a third party. This would normally be a company that specialises in home reversion products.

In return for the sale you can receive either a lump sum an income or a combination of both.

Releasing Equity from your home is a complex matter and you should always seek professional advice before proceeding.

The Financial Services Authority offer a consumer leaflet on Releasing Equity from your home. Please click on the link to obtain a copy.