Are you planning for equity release? Do you know about all the schemes properly? Which scheme will suit your financial requirements the most?
It will be beneficial for you to compare equity release schemes. It will enable you to understand the pros and cons different equity release schemes.
- Lifetime mortgages,
- Home-reversion plans,
- Interest-only plans,
- Shared appreciation mortgages,
- Home income plan.
To compare equity release schemes, you must know all its spheres properly.
Life-time mortgages and home-reversion plans are the most common of all; here I will compare equity release based on these two plans.
- Income procedure: Both of these plans offer you to enjoy a lump sum and tax-free income. But, home-reversion plans allow you to drawdown smaller amounts as per your requirements. Here, you get the privilege to withdraw smaller amounts according to your needs. But, in lifetime mortgages you cannot apply the same method to withdraw the amount you release through equity. One thing to add here that in mortgage plans you can change your payment into monthly installments.
- Future security: In home reversion plans, you can secure a pot full of cash for your future but in lifetime mortgages, you will not get this opportunity.
- Property owner: In lifetime mortgage scheme, you remain the owner of your property until your death. Whereas in home-reversion plans you start selling smaller parts of your property. When you finish selling the whole part of the property, you lost the owner-ship of your property.
- Repayment procedure: In lifetime mortgages you can repay the monthly installments with some plans. In the other hand, home reversion plans do not allow you to make monthly repayments.
It is better to compare equity release schemes before you go for any of the plan.