There comes a time when eventually you will need to use some of the equity that has built up in your home to help with some of your living expenses. But, how to release equity is a question most asked. Most equity release schemes are geared towards the elderly since they have more equity that has built up over the years. An elderly couple can obtain cash from their home in the form of an equity release plan.

An elderly couple can find out how to release equity from their property by contacting an independent equity release adviser. The independent equity release adviser will discuss with the elderly couple their options. Two of the options that the independent equity release adviser will tell the couple about are lifetime mortgage and home reversion plans.

With a lifetime mortgage plan, the elderly couple can receive a tax-free cash lump sum and still remain in their home. The couple will not have to make any monthly payments on the loan while they are living in it. The interest that has accumulated while you are living in the home will be paid in full once you pass away or move into long term care.

Lifetime mortgage plans offer more than just the standard roll-up plan outlined above. You also have drawdown, enhanced, and interest only plans to choose from.

Drawdown is an equity release mortgage where you have a limit on the account based on age, health, and equity value in your home. You elect how much you take out in a payment amount each time. You are only charged interest for the amount you remove from the account and not the entire limit set.
Interest only lifetime mortgage is the only equity release plan that requires a monthly payment. You pay interest on the account until you die or move out. It leaves the principle of the initial loan left to pay off at time of death or move to care facility. It does require you to have disposable income to cover the payment amount.
Enhanced lifetime mortgage is for those in a poor health situation. Typically there are two doctors in agreement about the life expectancy of someone’s health in that they have only a specific amount of time left before home care will no longer be appropriate. In this situation the monetary allotment is often larger to ensure the person has a comfortable life in their own home for as long as possible.

With a home reversion, the elderly couple can sell all or half of their property. By selling just half of it, it allows the couple to gift the other half to their beneficiaries when they pass away. Just like a lifetime mortgage, the couple will not have to make any monthly payments and can remain in the home until they pass away or go into a nursing care facility.

• Home reversion offers a lifetime tenancy agreement to the elderly couple remaining in the house. It states the couple named in the home reversion plan is able to stay in the house for their lifetime or until they decide to move out.
• At time of moving out the house will be sold. The home reversion provider gains their investment and any leftover income from the sale is given to beneficiaries.
• Home reversion has become popular again for the reason that an inheritance is guaranteed with the sale of the home.

With both plans, it allows the elderly couple a capital sum or to have a steady flow of income for the rest of their lives. With a home reversion, you can usually obtain a greater lump sum than you would receive if you were getting a lifetime mortgage.

An elderly couple who are over 55 are eligible to qualify for a lifetime mortgage. However, for a home reversion you need to be 65 & own your main residence with no or little mortgage.

How to release equity is simple once you understand equity release schemes like home reversion and lifetime mortgages. The questions now are what is the application process and how long will it take to release the equity? The application process requires you to give personal information and housing information to a provider so they can determine if you qualify for the mortgage or home reversion.

The process takes 6-8 weeks for lifetime mortgages and up to 12 weeks for home reversion. At each stage of equity release it is a good idea to have your adviser on hand.