Mythbuster: "I'll have monthly repayments"

Do you make monthly repayments with equity release?

Monthly repayments can be a huge burden, but with equity release there is no need to worry.

Many of our customers choose to use the tax-free cash they release from their home to pay off existing debt and reduce their household's monthly expenditure, with no need to factor paying it back into their budgeting. Although you should always think carefully before securing a loan against your home to repay existing debt.

With equity release, you don’t have to make monthly repayments. That’s because a lifetime mortgage (a type of equity release) is a loan secured against your home and the loan plus compound interest, is typically paid back when your plan comes to an end. That’s usually when you, or the last remaining applicant, either passes away or enters long-term care.

Even though there are typically no monthly repayments to make with a lifetime mortgage, all plans we recommend come with the option to make ad-hoc or regular payments to reduce your total cost of borrowing. Even if you're only able to make small repayments, it will help reduce the amount of interest owed over the lifetime of your loan.
 

Are there monthly repayments for home reversion plans?

There are also no monthly repayments with a home reversion plan, another type of equity release where you sell all or part of your property to a reversion company for lower than market value to receive a cash lump sum. Therefore, it’s not a loan, as you’re selling all or a stake in your home. By taking out equity release, you can rebalance your household budget much more effectively than with some other lending alternatives.

However, our specialist equity release advisers will always discuss other alternatives to equity release with you to make sure you’re making the right choice for you.