Post War Baby Boomers can now give themselves an entire new lease of life by way of an equity release scheme. These not too long ago retired house owners are sometimes house rich but money poor as a consequence of lack of excellent pensions and the ever rising cost of living.

Equity Release Defined

Equity release is the commonest name used for schemes that release cash locked up in a retired house owner’s property. The term ‘Equity’ means the amount of cash worth that could be realized on the sale of a property. Money strapped retired house owners are sometimes house rich however money poor during numerous levels of retirement. Soaring living costs that out strip inadequate pension provision is the primary factor that impacts the quality of life and even the essential essentials, for what should be retirement golden years for a lot of post war baby boomers. When children grow up and depart residence, some retired home owners with massive properties are able to trade down to a smaller lower value property and launch the money (equity) in their bigger house. However trading down is probably not an option for many, as their current property will not be large enough. Perhaps they merely do not want to move for many reasons equivalent to emotional attachments, close proximity of kin and mates etc. So what are the alternatives to trading down? With the exception to selling your own home and renting one other property, there are different ways to release the money locked up in your house.

Completely different Types of Equity Release Schemes

Broadly speaking, these totally different types of equity launch schemes are often known as a Lifetime Mortgage and ‘Home Reversion’. Basically a life time mortgage as the name implies, is a mortgage for life. There are many variations on this theme with fixed rates for life, interest rolled up and draw down schemes, to name but a few. The principle function of the lifetime mortgage is that ownership of the property is retained collectively with the benefits of elevated property values. When the house is sold, the lender is repaid and the balance is retained by the house owner or their estate. The opposite type of equity release scheme is known as Home Reversion. Essentially this is a way of selling your property at a reduced worth for the lifetime right to live virtually lease free. The term ‘Reversion’ could appertain to the fact that the property ultimately reverts to the investor that provided funds to the house owner. The benefit of this scheme is that more money can usually be released through a reversion plan than a Lifetime mortgage, significantly for older dwelling owners. Again there are many variations on the theme, corresponding to a part reversion, whereby only a portion of the property is used to provide funds.