The options available

When choosing an Equity Release Plan you will have two types of scheme to choose from – a Lifetime Mortgage or a Home Reversion Plan, both of which could allow you to take a cash lump sum.

Lifetime Mortgages

The most popular method of releasing cash is currently a lifetime mortgage. A lifetime mortgage is a loan which enables you to release the value tied up within your home allowing you to receive a cash lump sum, which you can spend as you choose. This long-term loan which is secured against your property, is paid off when your home is sold, usually following your death or when you permanently vacate the property. No interest repayments are required until the loan is paid off with the interest being "rolled up" with the loan.

Throughout the period of the loan you and your partner are able to continue to live in your home and benefit from an improved lifestyle as a result of the release of the cash lump sum.

Lifetime mortgages pay out a cash lump sum at the commencement of the mortgage, however a flexible lifetime mortgage allows you to choose a lower initial lump sum with access to a pre-approved cash reserve from which you could withdraw more monies as and when required. This ensures that you keep any interest rolled up to a minimum and allows you to decide when you wish to make withdrawals in the future.

Lifetime Mortgage Option and Flexible Mortgage Option

This is a loan secured against your home, with no regular payments to make as the loan and interest are rolled up and usually repaid when you die or go into long-term care.

Benefits:

  • Available to those aged 55 and above
  • No interest repayments made during your lifetime
  • You may still benefit from any rise in house prices as ownership of your home remains with you
  • Your next of kin may still receive funds from the sale of your home on your death, provided the amount of the loan outstanding is less than the value of your property at the time
  • Our "no negative equity" guarantee ensures that you do not have to make up any shortfall between the selling price of your home and the amount of outstanding loan and interest
  • By choosing our Flexible Mortgage Option you can decide the most appropriate time to withdraw funds and as a result minimise the amount of rolled up interest

Important considerations:

  • The longer you live the less equity you own
  • If you live a long time you may end up owing the total value of your home, leaving nothing for your next of kin
  • Once you commence a plan you will not be able to use your home as security to raise further funds

This is a Lifetime Mortgage. To understand the features and risks, ask for a personalised illustration.

(This should be arranged through your Independent Financial Adviser or Mortgage Broker).

Home Reversion Plan

Available to those aged 65 and above, a Home Reversion Plan involves selling part of your home to Hodge Lifetime. If you choose a Home Reversion Plan you will be granted a lifetime lease which entitles you to remain in your property, rent free for the rest of your life.

Plan holders agree to sell a percentage of their property and receive a proportion of that percentage, which is dependent on age and gender, as a tax-free cash lump sum.

When the property is sold, usually following your death or when you permanently vacate the property, the sale proceeds, less any selling costs, are divided between Hodge Lifetime (the Home Reversion Company) and yourself in the proportions that each party owns. As a result you may leave any share of the home not sold to Hodge Lifetime as guaranteed inheritance to your estate.

Benefits:

  • Plan holders can live in their home rent free throughout their lifetime
  • Plan holders can choose to leave a guaranteed proportion of their home to their next of kin
  • Plan holders benefit from any rise in house prices on the proportion of their home not sold to Hodge Lifetime

Important considerations:

  • Plan holders will not benefit from property price growth on the proportion of their home sold to Hodge Lifetime
  • Plan holders do not own all of their home
  • Once you commence a plan you will not be able to use your home as security to raise further funds

This is a Home Reversion Plan. To understand the features and risks, ask for a personalised illustration.


(This should be arranged through your Independent Financial Adviser or Mortgage Broker).


Next: How to apply



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