Equity Release - Too good to be True!?

capital0ne

In the Daily Mail (yes I know.....) Mail Finance section today they have their usual 4 page supplement, "Could releasing tax-free cash from your home be right for you?"

It states in the blurb: "The most popular form of equity release, a lifetime mortgage, also allows you to continue to own 100% of your home."
Surely this is mis-information and misselling?
You don't own 100% the ER company owns a percentage of whatever you've released.
Am I right or am I right?

Maybe those of you who have taken out a lifetime mortgage can let us know. Do you own 100% of your home? Can you sell it and move - you could if you owned 100% of it couldn't you?

Let_Us_See

Technically, it is correct as you retain 100% ownership with a lifetime mortgage. As security for their loan, the provider will place a First Charge on the property.


You can certainly move to another 'acceptable' property, but the equity held will be property value less existing lifetime mortgage balance.

Browntoa

And you are rolling up interest on the loan amount until it is repaid

ACG

You still own the property 100% as far as I am aware.
But you may find there is no equity left when you pop it and the kids/grand kids are looking for the inheritance.

There are downsides to everything, but my view is you worked for your money/home, spend it on whatever you want. I tell my parents that all the time... really quietly :P

davidmcn

Think it's just the OP being confused by the common misconception that a mortgage means the lender "owns" a portion of the property rather than merely having a charge over it. As opposed to other equity release schemes where ownership is in fact transferred.

capital0ne

davidmcn wrote: »

Think it's just the OP being confused by the common misconception that a mortgage means the lender "owns" a portion of the property rather than merely having a charge over it. As opposed to other equity release schemes where ownership is in fact transferred.

Yep, you're correct I didn't get the difference between 'ownership' and 'charge'

So I own the property 100% but it's value is market value less the charge to the ER company :T:T:T