In recent years, some people have found most of the value of their estate tied up in their home and have turned to Equity Release schemes as a way to unlock their capital. If you are aged 55 or over, a homeowner, and/or have paid off most of your existing mortgage and want to release some capital, this might be the right option for your wealth management strategy.

There are many reasons why Equity Release can be considered by a homeowner such as having an extra income to support your future lifestyle, spending more, one-off costs, expenses, family needs, supporting any of your children with a deposit on a property, amongst other reasons. Equity Release is a way of accessing your property’s value to have cash available in your later life.

Normally, there are two types of products: Lifetime Mortgages, where you take a loan against your property; and Home Reversion plans, where you sell a part of it, or all of it. A lifetime mortgage is repaid from the value of your home after you pass away. Under a home reversion plan the estate would be reduced along with the money being spent.

The money can then be used as an income during retirement, or to make gifts, which would reduce the value of the taxable estate (provided you survive any gifts by seven years). After death, the lifetime mortgage loan amount and any interest on the loan will be repaid from the value of the property for the lifetime mortgage.