Mortgages Guide | Mortgage Help Product Information | Equity Release Mortgages


The equity in a person's house is the excess of its value over the amount of any loan secured on it. For a house without a mortgage, or where it has already been paid off, it will be the total value of the property. Many people have a great deal of money tied up in the value of their house. An equity release mortgage can covert some of that money into cash, a process that is normally known as 'equity release'.

Sometimes people want to release equity in their homes because they need cash for a particular purpose. This might be for home improvements, such as the installation of double glazing or the building of an extension. A second mortgage or further advance from an existing ledner can achieve this, but would require additional payment.

Equity release, or home reversion schemes are a fairly simple and straightforward way of using your property to raise a cash sum, without having to make any additional ongoing payments.

You continue to live in your house for as long as you and your spouse are both alive, on a lifetime guaranteed rent-free lease. You do not have to pay anything back during your lifetime and you can move to another house at any time.

The lender normally releases a cash sum that is less than the value of the property, in order to take into account the absence of rent for possible a very long perod. Their investment is returned to them by selling your home after the death of the last survivor of you and your partner.

Before you take out an equity release mortgage you are advised to take professional advice, as well as ensuring that the scheme belongs to the SHIP (Safe Home Income Plans) Code of Practice.