Post War Baby Boomers can now give themselves a whole new lease of life by an equity release scheme. These not too long ago retired residence owners are often house rich but money poor due to lack of good pensions and the ever rising value of living.

Equity Release Defined

Equity launch is the most common name used for schemes that launch cash locked up in a retired residence owner’s property. The time period ‘Equity’ means the amount of cash value that could possibly be realized on the sale of a property. Cash strapped retired dwelling owners are sometimes house rich but money poor during varied phases of retirement. Soaring living prices that out strip inadequate pension provision is the primary factor that affects the quality of life and even the fundamental essentials, for what should be retirement golden years for many put up war baby boomers. When children grow up and go away home, some retired residence owners with massive properties are able to trade down to a smaller lower value property and release the cash (equity) in their larger house. Nevertheless trading down is probably not an option for a lot of, as their existing property might not be large enough. Maybe they simply don’t wish to move for many reasons corresponding to emotional attachments, shut proximity of relations and friends etc. So what are the alternatives to trading down? With the exception to selling your own home and renting another property, there are two other ways to release the money locked up in your house.

Different Types of Equity Release Schemes

Broadly speaking, these two different types of equity release schemes are sometimes known as a Lifetime Mortgage and ‘Home Reversion’. Basically a life time mortgage as the name implies, is a mortgage for life. There are various variations on this theme with fixed rates for all times, curiosity rolled up and draw down schemes, to name but a few. The main function of the lifetime mortgage is that ownership of the property is retained together with the benefits of increased 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 launch scheme is known as Home Reversion. Essentially this is a way of selling your property at a discounted price for the lifetime right to live virtually hire free. The time period ‘Reversion’ may appertain to the fact that the property finally reverts to the investor that provided funds to the home owner. The benefit of this scheme is that more money can usually be launched by a reversion plan than a Lifetime mortgage, notably for older house owners. Again there are lots of variations on the theme, equivalent to an element reversion, whereby only a portion of the property is used to provide funds.

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