Is Equity Release Right For Me?

Equity release plans are lifelong commitments

You should always consider whether alternative options could be used in preference to equity release. These could include:

  • Ensuring that you are claiming all benefits and grants to which you could be entitled
  • Moving to a smaller property to release funds
  • Getting assistance from your family

The benefits of equity release include:

  • Being able to stay in your home
  • Retaining your independence to make the most of retirement
  • Releasing a cash sum that could make a difference to your retirement

Deciding on which plan is suitable for you can be a complex process, and it is a good idea that you obtain financial advice. In fact, we insist upon it. You can read more about the role of the financial adviser here.

What are my product choices?

There are two main types of equity release plan:

  • A lifetime mortgage
  • A home reversion plan

Please note that Hodge Lifetime only offer lifetime mortgages.

The key differences between these types of plan are explained below:

Lifetime mortgage Home reversion plan
Contract type Mortgage loan You sell a share of your property
Key Features

You are not required to make any repayments over the life of the loan

Interest is added to loan and 'rolls-up'

Repayment is due on death or moving to long term care

No Negative Equity Guarantee. SHIP-approved lifetime mortgages guarantee that you won't owe more than the value of your home.

The reversion provider buys a share of your property at its current market value, adjusted to reflect the expected term of your occupation

When the property is sold, the reversion provider receives its share of the sale proceeds

Advantages

You maintain ownership of 100% of your home

You can benefit from future house price growth

You can repay your loan at any time but you may incur early repayment charges

You will always own your share of the property which you can pass on to your beneficiaries

As there is no roll up of interest, control can be maintained over the percentage of the property remaining

Disadvantages

As interest is added to the loan, you may not know what will be left for beneficiaries in the future

You cannot reverse the transaction once you have sold a share of your property - this could limit your future options

There will be no benefit from any future house price growth on the part of the property that has been sold

These products are lifetime mortgages or home reversion plans. To understand their features and risks, ask for a personalised illustration.

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