Having the benefit of independent financial advisers, EquityRelease2go.co.uk can provide impartial advice as to which of the many equity release schemes available are most suitable for your requirements.

• Roll-up Equity Release Plans - start from age 55 with certain lenders & allow the property owners to release tax free cash from their property. The amount that can be borrowed is a percentage of the property value, based on the age of the youngest applicant. In summary, the younger you are the lower the percentage that can be raised as your life expectancy is anticipated to be greater than someone older. 

With a roll-up equity release mortgage the house will always remain in the householders name & NO ownership passes to the lender. They however place a 1st legal charge on the property to ensure that when the house is eventually sold, the lender will be repaid first. Interest rates are fixed from inception giving the benefit to the planholder that the future balance will always be known & calculated.

• Drawdown Equity Release Schemes - are a form of roll-up equity release scheme which provides the applicant with greater flexibility. Gone are the old inflexible equity release schemes whereby you had to budget for the release over a 5 year period & leave the bulk of the funds sat in a bank/building society account. Not good advice when the rate of interest paid on the equity release scheme is higher than that being received on any savings.

Therefore, drawdown equity release plans were devised that allowed the capital to be withdrawn in stages. The advantage of the drawdown therefore is that interest is only charged on the capital actually withdrawn; not on the funds still left in reserve with the equity release company. 

Future funds can be withdrawn from the reserve facility as & when required 7 can be taken usually in as little amounts as £2,000 a time. Once these drawdown schemes are set up, all costs have been met as no further charges will apply for additional withdrawals. The initial capital drawn will have a fixed interest rate for life, however any subsequent withdrawals will be at the rate applicable at the time of withdrawal.

• Enhanced Equity Release Schemes - a new addition to the equity release market are lifetime mortgages whose maximum lump sum are based on ill health issues. Therefore, if one has an impaired life expectancy similar to an annuity plan, one can obtain an additional lump sum to the norm. The assumption from the enhanced plan lenders point of view, is that if the qualifying illnesses are evident then life expectancy will be curtailed. Therefore the lifetime mortgage provider will obtain their funds back quicker than someone in good health & consequently can afford to release more initially. A bold concept & a welcome innovation in the equity release market. The three specialist providers of these enhanced equity release schemes are Aviva, Partnership & more2life with lump sums at certain ages being over 5% more than the standard rates on offer. Therefore, for these looking for the maximum release possible should certainly consider these as an option.

• Lifetime Interest Only Mortgages - have now become an integral part of the retirement equity release market. Roll-up equity release is not always suitable for everyone due to the escalating nature of the future balance. Therefore, if a good monthly disposable income can be evidenced then a lifetime interest only mortgage could feasible. The amount that can be borrowed is dependent upon the retirement mortgage selected.

1. The Halifax Retirement Home Plan is based upon income & affordability, similar to how a conventional mortgage is calculated. This is specifically a mortgage for pensioners with a minimum starting age of 65. Nevertheless, the Halifax will show some discretion should anyone be over the age of 55 & with pension income.

The Halifax provide intermediaries such as EquityRelease2go with an affordability calculator that provides an estimate of how much can be borrowed. The mortgagor will only have to pay back the interest charged each month, the resulting effect is that the mortgage balance will allows remain constant. The added benefit of this to most is that the heirs to the estate will know exactly how much will need to be paid at the end of the day. Maximum borrowings are 75% of the property value, however this is still subject to the income affordability measures in place. With current Halifax 2 year tracker rates starting from 2.44%, the monthly payments on a £30,000 Halifax pensioner mortgage will only be £61pm.

2. The Stonehaven Interest Select Plan is another format of the interest only lifetime mortgage. The Stonehaven equity release scheme is sometimes advertised as a self certification or self cert mortgage as no proof of income is required. Instead Stonehaven's calculator determines how much can be borrowed on the same based as traditional equity release schemes & therefore the variables used are age & property value. With rates starting from 6.13% & fixed for life, this represents a good historical low rate for those concerned about future interest rate increases.

The added benefit of the Stonehaven Interest Select plan is that at any time in the future the plan can be switched into a roll-up equity release scheme with Stonehaven. Therefore, if affordability ever became an issue in the future, the house cannot be repossessed as once 3 payments are missed the option will be automatically exercised. 

• Home Reversion Schemes - the original format for any equity release plan, the Home Reversion plan is the least popular form of releasing capital from one's property. Reversion schemes work by the property owner actually selling a percentage of the property value in exchange for a tax free lump sum. This can be anything up to 100% of the property value & ownership. Meeting SHIP criteria, the home reversion company has to provide a lifetime tenancy to the planholder which means they can live their rent free for the rest of their lives.

The advantage of home reversion schemes is the guaranteed inheritance option they provide. If say 30% of the property is sold to the reversion company then 70% of the eventual sale value will be passed to the heirs to the estate. Companies such as Bridgewater, Aviva, New Life Mortgage & Hodge Lifetime are the SHIP members from this corner of the equity release marketplace.

For impartial & free advice call one of our equity release advisers on 0800 321 3156.

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