These products are mainly designed to suit retired or elderly borrowers who want to have a high equity in their homes and want to raise cash but who don’t want to have to sell up and move to release the equity in their home. There are three main types of equity release products, where homeowners can raise funds by trading equity in their homes.

Reverse Mortgages where the home owner borrows funds against the equity in their home and where the principal and interest is not repaid until the home is sold. (Usually when the borrower dies or otherwise vacates the home, or sells it). There are no interim loan repayments and they are structured with a borrowing limit that ensures the accumulating principal and interest does not outgrow the home’s value during the lifetime of the youngest homeowner/borrower. Upon completion or death of the borrower, the executors usually have an additional 12 months to refinance the loan or sell the home.

 Home reversion schemes where the consumer sells all or part of the home to a reversion company. The house is usually sold for an agreed figure, usually between 35% and 60% of its current market value, however the borrower can remain in the property until they die or voluntarily vacate the home. There are both; sale and lease, and sale and mortgage versions of this product.

 The third Equity release plan is Shared Appreciation Mortgages (SAMs) where the borrower gives up the right to the capital gain on a portion of the property in return for paying low or no interest on that portion of their borrowings