Equity release mortgage schemes are rage out there in the financial markets in UK. There many advantages and disadvantages of this equity release schemes which are discussed in this content. Equity release mortgage gives an individual in the age of 55+ to sell his property for the lump sum cash or regular income from the Mortgage Company while still living in the home unless the person dies or moves to long term care homes.

Lifetime mortgage scheme

Here the asset of the individual is used as collateral. The applicant will not make any monthly payment or installment to the lending company. It is only after the death of the individual, this property is sold by the company and profits are made. This asset can be mortgaged if the owner moves to the nursing homes for long times in case of chronic illness. In this scheme, the company will apply an interest over the loan value to calculate the total payoff amount.

In this case you will not be able to pass the property or the capital to your loved ones.

House inversion equity release scheme

Under this plan, the company will buy a part or complete portion of your place. One remains in the house and gets the monthly repayments from the company. With this a steady monthly income can be generated for the rest of the life. This plan is more suitable for persons above 70 years of age. One may buy to let mortgage and keep his financial freedom till the last breathe of his life.

One disadvantage of this scheme is that it one needs to pay for the repairs of the house and upkeep expenses of the property are also charged from the owner’s account.  Equity release mortgage schemes may differ from company to company and according to your individual requirements and expenses. Therefore, an interaction with financial advisor is necessary to know which mortgage plans best suits you.