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 on. 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. Capital release refers to a range of products that allow you to access capital (cash) immobilized in your home if it is older. You can accept the money you release as a lump sum or, in several smaller amounts, or as a combination of both.
Equity release is a type of loan that allows older borrowers to access some of the money tied up in their property. There are different types, such as a life mortgage or a home reversal plan. The amount you can borrow will depend on your age, the lender, and the value of your property. The capital release allows homeowners 55 and older to free up tax-free money from the value of their home.
The amount you can release depends on your age and the value of your home. Depending on the capital release product you choose, you can claim your money as a large lump sum or as a series of smaller lump sums. There are costs and risks involved in releasing cash through a lifetime mortgage, as well as benefits, and reviewing alternative options with a financial advisor should be a key part of your decision-making process. Before starting a capital release plan, you should be given a clear and precise explanation of what your capital release plan entails.
There are numerous upfront costs involved in creating a capital release plan, so make sure you are clear about all of these costs before proceeding. The Equity Release Council (ERC) is a non-profit organization that represents different types of companies involved in the release of capital.