Equity release lets you access some of the wealth tied up in the value of your home without having to move house or sell your property. The money you release is tax-free and yours to spend however you choose.
You do not need to make any monthly repayments with an equity release plan (although with some new plans you can make interest payments if you want to). Instead, the interest on the amount you release is rolled up and added to the sum of the loan over the life of your plan. This is known as ‘compound interest’.
The total amount owed is repaid when the plan comes to an end, usually when you pass away or move in to long-term care. At that time your property is sold and the sale proceeds then repay the money owed to the lender of your plan.
Any money left over is paid to you (in the event you have moved into long-term care) or to your beneficiaries, in accordance with your will.
There is a ‘no negative equity guarantee’ that applies to all Equity Release Council approved plans and it means you will never owe more than the value of your home.