Equity Release - Comparison

Factor

Lifetime Mortgage

Home Reversion

How interest is calculated?

As a percentage of the advance - as with any other loan.

No interest charged. Lenders take equity stake in property.

Protection against rising interest rates?

The majority of plans are at a fixed rate of interest for life.

No risk, as no interest charged.

Protection against falling value of property?

Can be protected by "no negative equity guarantee". Also some providers offer enhanced protection of a percentage of the property value.

If less than 100% used the provider shares with you an fluctuations in value.

How your house will be valued?

The lender will appoint a surveyor to value your property.

The Provider will appoint a surveyor to value your property. The actual value is then reduced taking account of your age and the fact that you will be living in the property rent free for the rest of your lives.

Can you move house?

Providing you use a SHIP member provider you are guaranteed the right to move home and take the loan with you. (the property will need to be acceptable to the lender).

Providing you use a SHIP member provider you are guaranteed the right to move home and take the loan with you. (the property will need to be acceptable to the lender).

Can you repay your loan?

Yes, but there may be early repayment charges for doing so.

Home reversion plans are not designed to be repaid early.

Suitable to leave property as inheritance?

Yes. You retain ownership of the property. The loan must be repaid from either the sale proceeds or other funds.

The provider owns all or part of the property and therefore this plan is not designed for those wishing to leave the actual property.

Suitable for cash inheritance?

Yes, cash released can be used for any purpose.

Yes, cash released can be used for any purpose.

Useful to reduce inheritance tax liability?

Yes, if cash is "gifted" at least 7 years before death. This can save having to gift a whole property.

Yes, cash value of house is available, although there may be no equity in the property to inherit.