Downsizing protectionIf you want to move home at a later date without any early repayment charge, downsizing protection allows you to pay the loan back without penalty. There are two conditions. Firstly, the move must happen after you've had your plan for at least five years and secondly, where you want to move to has to meet the lender's criteria on downsizing.
With a drawdown plan you release the money you want to, when you want to - so you only accrue interest on the money you take. However some lenders don't guarantee you will always be able to make further withdrawals from your reserve funds.
Partial capital repayments
If you're expecting an inheritance yourself or some spare funds from time to time, some lenders will allow you to make partial capital repayments to pay off part of the loan without penalty. This will reduce the amount of interest that your lifetime mortgage accrues.
A plan with an interest payment option allows you to pay an agreed, set amount each month to decrease or remove the impact of the accrued interest, reducing money owned at the end of the plan - which could leave more money available to your estate. If you change your mind, or find yourself unable to make the interest payments, the plan can be converted to interest roll up, although this may incur an additional cost.
Some plans offer a three-year window with an option to repay the plan in full, penalty-free, after one half of a couple passes away or goes into permanent care.
No negative equity guarantee
Key recommends plans that are Equity Release Council approved, with what's known as a no negative equity guarantee. This means you can never owe more than the value of your home and debt will never be passed on to family.
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You might like to read How does equity release work?
Things to consider
Our independent, specialist advisers search the whole market to find the right equity release plan for you. They’ll explain all the options available and that taking a plan reduces the value of your estate and may affect any means-tested benefits you’re eligible for.
You have to get specialist advice before releasing equity; it’s the only way to do it. The initial consultation is free with no obligation to proceed. If you decide to go ahead with an equity release plan our advice fee, usually 1.99% of the amount released, subject to a minimum of £1,499, is payable only on completion.
With a lifetime mortgage, the most popular form of equity release, you’ll still own your home. As with any kind of mortgage, it’s a loan secured against your home.
You should always think carefully before securing a loan against your home.
If you are considering equity release we recommend that you read through Is equity release right for me?