The ability to release the capital value from your home and still being able to stay in your home is known, depending on how you do it as 'equity release' or 'home reversion schemes'.
Equity release is where you technically borrow from the value of your home by mortgage and the interest owed is either repaid or it builds up as a debt until the value of your property disappears.
Home reversion is where you sell a specific share of your home for a specific amount and when either you or the executors of your estate (on death) sell the property the property proceeds are shared out between the home reversion company and your estate.
Equity release is planned to come under the complete regulation of the main industry regulator, the Financial Services Authority (FSA). 'Home reversion' plans were not planned to be regulated i.e. there are no rules and regulations set down on how they should be advised on and what information has to disclosed to you, the consumer.
Not being regulated on how and by whom they can be sold by leaves people wide open to poor advice and selling practices. The Government now plans a 'U-turn' on this and reversion plans scheme will be included within the remit of the FSA, which is welcome news.
For a free fact sheet on Equity release and Home Reversion contact us.