This means they have the right to stay in that property for the rest of their life or until they move into long-term care.
Andrea Rozario, director general of Ship, said this means they are able to access their property wealth while remaining in their home, which can provide a huge comfort and source of relief for people.
Also as there are no monthly repayments to make, Ms Rozario said there are no worries around affordability for the customer.
In addition, she said both plans offer homeowners the chance to release an amount from their home as either a lump sum or regular sums, both of which are tax free.
Ms Rozario said this flexibility means that people can use the money for a whole range of reasons – whether to pay for a large, one-off expense such as a holiday – or as a supplement to regular income in order to meet the costs of living a decent standard of life.
Ms Rozario said opting for equity release also did not necessarily mean that an elderly person would have nothing to leave their loved ones.
She said: “If house prices increase over the time of the lifetime mortgage then there will likely still be an inheritance available for loved ones.
“If leaving an inheritance is of particular importance to the customer then there may be the possibility to take a protected equity lifetime mortgage or if a home reversion is selected the percentage of the home not sold will be left to the estate.”
Cons:
* One of the things that potential customers should consider is that interest is added on a compound basis with lifetime mortgage products, so the longer they have the loan the higher the cost will be.
* Another point to consider is the impact of fluctuating house prices. Releasing the equity in a home could impact on the inheritance that is left to the homeowner’s family as well as the state benefits the homeowner receives, Vanessa Owen, head of equity release at LV, warned.
