Yes, you can get a equity release if you have a mortgage on your property and there are a variety of options available. If you are a homeowner with a mortgage, are over 55 and would like to release some of the cash tied up in your home, you could get a capital release loan. The first step may be to talk to your current mortgage lender to see if you are going to extend your mortgage term. You may be able to reconsider releasing capital in a few years.
Remember that as long as you are up to date with your payments, the mortgage balance will not increase. Even so, the percentage of funds you can release from your home will increase each year, which could cover any deficit you face. A capital release mortgage involves a lender giving you cash in exchange for a portion of the proceeds from the sale of your property later. But unlike a traditional mortgage, which you pay within a certain period of time, a capital release loan is not settled until you leave your home.
You can withdraw your home equity in several ways. They include home equity loans, home equity lines of credit (HELOC), and cash-out refinances, each of which has benefits and drawbacks. This is the most popular form of capital release. Here you borrow part of the value of your home at a fixed or limited interest rate.
While rates are the cheapest they've been in years, freeing up capital itself is still an expensive and risky way to raise money. Payment to your current mortgage lender is made by the equity release lender's attorney or your equity release lawyer. In such a case, you will only need funds that cover your mortgage payment and any capital release establishment charges (lender, advisor and lawyers). Along with a host of other factors, such as age, health and value of the property, this will determine if the lender accepts your application and how much they are willing to allow you to release.
If you are 55 or older and you fully own your home or have any outstanding mortgages, you can use an equity release scheme to unlock some of the equity accumulated in it over the years. Whether you currently have a payment mortgage or an interest-only mortgage, you need to repay it as part of the capital release process. By freeing up capital through a capital release agreement, these borrowers can use that money to liquidate the capital they owe and stay in their own home. From the age of 55, you will be able to release about 25% of the value of your property, and this percentage will increase with each birthday, to a maximum of approximately 60% starting at age 85. To better understand if you will qualify and be able to get a capital release, let's look at them one by one.
When applying for a capital release plan, lenders will ask you how much of your home you actually own. This money can be released as a single lump sum, or you can have a “reduction” facility open to you, allowing you to use that money when you need it. The purpose of the capital release is to allow you to collect part of the value incorporated into your property and, as such, it is possible to do so even when you have an outstanding mortgage on the property. This is because the capital release lender will be the priority charge and the balance is likely to increase (if you don't make monthly repayments).
Capital release refers to a range of products that allow you to access capital (cash) immobilized in your home if you are older. On the day your capital release application is completed, you won't have to think about paying your mortgage. .