What are 'Capital Raise/Release Equity' mortgages?

Introduction

The equity in a person's house is the excess of its value over the amount of any loan secured on it. For a house without a mortgage, or where it has already been paid off, it will be the total value of the property.

Many people have a great deal of money tied up in the value of their house. An equity release mortgage can covert some of that money into cash, a process that is normally known as 'equity release'.

Sometimes people want to release equity in their homes because they need cash for a particular purpose. This might be for home improvements, such as the installation of double glazing or the building of an extension. A second mortgage or further advance from an existing ledner can achieve this, but would require additional payment.

Equity release, or home reversion schemes are a fairly simple and straightforward way of using your property to raise a cash sum, without having to make any additional ongoing payments.

You continue to live in your house for as long as you and your spouse are both alive, on a lifetime guaranteed rent-free lease. You do not have to pay anything back during your lifetime and you can move to another house at any time.

The lender normally releases a cash sum that is less than the value of the property, in order to take into account the absence of rent for possible a very long perod . Their investment is returned to them by selling your home after the death of the last survivor of you and your partner.

Before you take out an equity release mortgage you are advised to take professional advice, as well as ensuring that the scheme belongs to the SHIP (Safe Home Income Plans) Code of Practice.

Equity release is one of the fastest growing niche mortgage markets in the UK we are keen to meet customers changing needs and demands.

Dominic Toller , Bristol & West Mortgages' head of marketing, said: "With a reputation as The Specialist, the equity release market is one where Bristol & West Mortgages should have a presence. We have recognised the clear need in the market and we have developed a competitive product designed to meet the changing needs of intermediaries and their clients."

As members of Safe Home Income Plans (SHIP) Bristol & West Mortgages stresses that it belongs to an organisation dedicated to the fair and proper marketing of equity release plans.

The savings you have accumulated throughout your life have been locked up in the biggest investment you've ever made - your home.

Why release the equity in your home ?

If you are planning to buy a holiday home, travel during your retirement or perhaps you just want relaxing lifestyle with a large retirement income, you are going to need money. If you do not have the funds available to achieve such goals, you may want to consider a loan or perhaps a re-mortgage. Both of these options, however, require a monthly repayment. Releasing the equity in your home via an equity release plan can give you a retirement income and/or a lump sum of cash, while at the same time allowing you to live in your own home for the rest of your life.

Equity release provides homeowners with the chance to stay in their property while tapping into its value. All the current schemes available allow you to stay in a property for as long as you like, until you die or move out but also provide you the opportunity to access some of the value that has built up, either as a lump sum or a regular income.

State Pensions are no longer the most reliable income source for people who are retired. The retired population of the UK is increasing steadily in proportion to the rest of the population, and the pension funds provided by the government are no longer adequate. Average life expectancy has gone up, meaning your retirement could be a bigger part of your life than you were expecting. If you have invested money into your home in the form of a mortgage throughout your life, come retirement, you may want to get something in return; such as a guaranteed retirement income, or a cash lump sum.

For more information contact one of Money Advice Direct's trained mortgage specialists on: 0800 074 6918 or email: mortages@insolvencyhelpline.co.uk