You could choose to sell your current property to free up funds or perhaps take out a loan, like Equity Release, if you’re over sixty years old and a standard mortgage isn’t available.
Have you considered your options? Read on to learn more about Equity Release and how the Homewise Home for Life Plan is a different, alternative option for your retirement.
What is Equity Release?
Equity Release is a type of mortgage which offers homeowners the opportunity to unlock funds within their current property, without moving to a new house.
There are two types of Equity Release, a Lifetime Mortgage and Home Reversion.
- A lifetime mortgage is a loan secured on your property where you’ll receive the loan amount as a tax-free lump sum. Typically, you won’t make monthly repayments as the compound interest grows and accrues over time, then the loan, plus the increased interest, is repaid when the property is sold after you pass away.
- The home reversion option means you sell all or part of your property at less than its market value in return for a tax-free lump sum, a regular income, or both. You’d remain in your current property as a tenant.
Equity Release loans could affect other areas of your finances, like benefits, tax and inheritance. It may be worth seeking independent financial advice before you commit to any Equity Release scheme, and check you’re happy and fully informed of all payments, interests and reversion plans before taking out this type of loan.
How is the Home for Life Plan different to Equity Release?
The Homewise Home for Life Plan is an alternative option for anyone over 60 years old looking to move home. We help people looking to move to a more suitable home and be secure for the rest of their lifetime.
You may need a more manageable home or wish to be closer to family for example, we can help boost your budget to find the perfect property. The Home for Life Plan is only applicable to the purchase of a different property and cannot be applied to a person’s current home.
With Equity Release, compound interest is applied, and repayments are made. Compound interest is where interest is calculated on the original loan amount plus any previous interest, essentially interest on interest, over the duration of the loan. Often the interest rate for Equity Release loans is much higher than a standard mortgage and can result in the debt quickly growing due to the nature of compound interest.
Put simply, our Home for Life Plan is not like Equity Release. We don’t offer any form of financial service, like a loan or mortgage here at Homewise.
We are an alternative option in that we help people secure their next home for a one-off reduced saving with no repayments, rent or interest for their lifetime. Our focus is helping people move home and have the security of a home they love for their retirement.
You’re planning for the long term so be sure you’re making the right choice for your future. Did you know, with the Home for Life Plan, you can protect a percentage of your home’s future value to be passed on as inheritance?
Want to know more about Homewise as an alternative option to Equity Release? Get in touch with our friendly Customer Service team and find out how we could help you in your retirement.
Alternatively, you can try our online Budget Booster! It's simple, quick, easy to use and could help you better understand your budget in just a few minutes.